Asked by
Scottie Lawrence
on Oct 15, 2024
Verified
When the operating activities section of the statement of cash flows is reported using the direct method:
A) Net income is adjusted for changes in noncurrent assets and noncurrent liabilities.
B) Operating cash receipts minus operating cash payments equals net cash provided (used by) operating activities.
C) Footnotes to the financial statements disclose the difference between net income and the cash provided or used by financing activities.
D) The income statement is prepared under the cash basis of accounting.
E) Noncash investing and financing activities is included in the statement of cash flows.
Direct Method
A cash flow statement reporting approach that lists major outgoing payments and incoming receipts during a period.
Operating Activities
Activities directly related to the primary business operations of a company, including the production, distribution, and sale of goods and services.
Net Income
The total profit of a company after all revenues, expenses, taxes, and dividends have been deducted.
- Understand the segments and steps involved in formulating the statement of cash flows.
- Identify and figure out the cash flows produced by operating incidents through the application of both the direct and indirect systems.
Verified Answer
ND
Learning Objectives
- Understand the segments and steps involved in formulating the statement of cash flows.
- Identify and figure out the cash flows produced by operating incidents through the application of both the direct and indirect systems.