Depreciation Expense Is Listed on the Direct-Method Statement of Cash
Depreciation expense is listed on the direct-method statement of cash flows because it affects income.
An increase in Interest Payable during the reporting period indicates that the cash paid for interest exceeded Interest Expense on the income statement.
The direct method of preparing the statement of cash flows:
A)has an identical operating activities section as the indirect method.
B)is used by a vast majority of companies.
C)is preferred by FASB.
D)is much easier for companies to compute.
Under the direct method of preparing the statement of cash flows,all of the following would be reported under operating activities EXCEPT:
A)collections from customers.
B)interest received on notes receivable.
C)dividends received on investments in stock.
D)cash proceeds on sale of long-term investments.