Asked by Denise Maxim on May 14, 2024
Verified
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 net 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.
Operating Activities
Activities that constitute the primary or main activities of a business, directly related to its operations and core business activities.
Net Income
The net income a company earns following the deduction of all expenses and taxes from its total revenues.
- Comprehend the variances between direct and indirect techniques for compiling the operating activities portion of the statement of cash flows.
Verified Answer
YS
Yasmyne SmithMay 15, 2024
Final Answer :
C
Explanation :
The indirect method for the preparation of the operating activities section of the statement of cash flows reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities. This method is a common technique used by companies to prepare their statement of cash flows.
Learning Objectives
- Comprehend the variances between direct and indirect techniques for compiling the operating activities portion of the statement of cash flows.
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