The Indirect Method for the Preparation of the Operating Activities

question 19

Multiple Choice

The indirect method for the preparation of the operating activities section of the statement of cash flows:

• A) Separately lists each major item of operating cash receipts.
• B) Separately lists each major item of operating cash payments.
• C) Reports income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
• D) Is required if the company is a merchandiser.
• E) Must not be used in all circumstances.

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Definitions:

Negative Information

Information that may be perceived as unfavorable or detrimental to the receiver's interests.

Bad News

Unfavorable or disappointing information that needs to be communicated in a sensitive and thoughtful manner.

Accusing Tone

A manner of speaking or writing that implies blame or responsibility for a wrongdoing, often leading to a defensive response.

Writing Clearly

The practice of expressing ideas in a straightforward and easy-to-understand manner, avoiding ambiguity and complexity.