ith respect to the statement of cash flows A.) Both the FASB and the GASB encourage entities to use the direct method B.) The GASB, but not the FASB, requires entities to use the direct method C.) The FASB, but not the GASB, requires entities to use the direct method D.) Both the FASB and the GASB require entities to use the direct method

ith respect to the statement of cash flows A.) Both the FASB and the GASB encourage entities to use the direct method B.) The GASB, but not the FASB, requires entities to use the direct method C.) The FASB, but not the GASB, requires entities to use the direct method D.) Both the FASB and the GASB require entities to use the direct method

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

With respect to the statement of cash flows

A.) Both the FASB and the GASB encourage entities to use the direct method

B.) The GASB, but not the FASB, requires entities to use the direct method

C.) The FASB, but not the GASB, requires entities to use the direct method

D.) Both the FASB and the GASB require entities to use the direct method

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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