When Preparing a Statement of Cash Flows Using the Direct

question 19

Multiple Choice

When preparing a statement of cash flows using the direct method,amortization of a patent is

• A) shown as an increase in cash flows from operating activities.
• B) shown as a reduction in cash flows from operating activities.
• C) included with supplemental disclosures of noncash transactions.
• D) not reported in the statement of cash flows or related disclosures.

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Definitions:

Revenue

The total amount of money received by a company for goods sold or services provided during a certain time period.

IFRS

Stands for International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is globally accepted for preparing financial statements.

IASB Standards

International Accounting Standards Board Standards, which are a set of accounting rules followed by companies across the globe to ensure transparency and comparability of financial statements.

Retrospectively Apply

The application of a new accounting policy to transactions, other events, and conditions as if that policy had always been applied.