Which of These Best Describes the Direct Method of Determining

question 7

Multiple Choice

Which of these best describes the direct method of determining cash flows from operating activities?

• A)Determination from adjusting net profit for non- cash receipts and payments
• B)Determination from the comprehensive statement of income
• C)Determination from the statement of financial position
• D)Determination from cash receipts and payments

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Definitions:

Written Promise

A formal pledge, often in the form of a document, affirming that one party agrees to perform or refrain from a specific action.

Short-term Receivables

Financial claims to cash due from customers or clients within one year, typically arising from the sale of goods or services on credit.

Current Assets

Resources anticipated to be transformed into cash, disposed of, or utilized within a year or throughout the usual cycle of business operations.

Percentage of Sales

A financial ratio that compares a company's profitability, expanses, or other financial indicators to its total sales, often expressed as a percentage.