Question

Which of the following methods of reporting cash flows provided by operating activities does the Financial...

Which of the following methods of reporting cash flows provided by operating activities does the Financial Accounting Standards Board recommend?

A. The indirect method
B. The direct method
C. Either the indirect method or the direct method
D. Neither the indirect method not the direct method

In preparing cash flows provided by operating activities using the indirect method, which of the following is not deducted from net income?

A. Decreases in current liability balances
B. Increases in current asset balances
C. Non-cash expenses such as depreciation
D. Gains on investing and financing transactions



Which of the following is classified as a financing activity?

A. Payment of dividends
B. Receipt of interest on loan receivable
C. Investment in another company’s stock
D. Receipt of dividend income



When a company repurchases its own stock, which of the following is the correct reporting on the statement of cash flows?

A. A use of cash in the investing section
B. A source of cash in the investing section
C. A use of cash in the financing section
D. A source of cash in the financing section
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