1.Do the following arguments support the use of the indirect method for presenting cash flow from operating activities in the cash flow statement?
Argument #1 – The indirect method presents a firm’s operating cash receipts and payments and is thus more consistent with the objectives of the cash flow statement.
Argument #2 – The indirect method provides more information than the direct method and is more useful to analysts in estimating future operating cash flows.

A)  No                                       Yes

B)  Yes                                     No

C)  Yes                                     Yes

D)  No                                       No

答案和详解如下：

1.Do the following arguments support the use of the indirect method for presenting cash flow from operating activities in the cash flow statement?
Argument #1 – The indirect method presents a firm’s operating cash receipts and payments and is thus more consistent with the objectives of the cash flow statement.
Argument #2 – The indirect method provides more information than the direct method and is more useful to analysts in estimating future operating cash flows.

Argument #1

Argument #2

A)  No                                       Yes

B)  Yes                                     No

C)  Yes                                     Yes

D)  No                                       No

The correct answer was D) 

It is the direct method, not the indirect method, that presents operating cash receipts and payments and is thus more consistent with the objectives of the cash flow statement. The direct method provides more information than the indirect method and is preferred by analysts who are estimating future cash flows.