Which of the following is true about the preparing the statement of cash flows?
A. The direct method adjusts net income for items that do not affect cash to determine net cash provided by operating activities.
B. The indirect method is easier and less costly to prepare than the direct method.
C. The indirect method shows operating cash receipts and payments.
D. It focuses on the differences between net income and the balance sheet.
Answer: B. The indirect method is easier and less costly to prepare than the direct method.
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A cost should be considered sunk when it:
A) produces no additional sales revenues. B) has no effect on future flows. C) is replaced by costs that are not yet sunk. D) is fully depreciated.
The SEC issues accounting standards in the form of:
A. Accounting Research Bulletins. B. Financial Reporting Releases. C. Financial Accounting Standards. D. Financial Technical Bulletins.