Question 1: The major difference between the indirect and the direct method of a statement of cash flows appears in which the following activities section(s)?
a. The investing activities and financing activities sections.
b. The investing activities section only.
c. The operating activities and financing activities sections.
d. The operating activities section only.
Question 2: In the statement of cash flows, the amount of depreciation and amortization expense is added back to net income because:
a. these expenses do not affect cash, but were subtracted in the determination of net income.
b. these expenses affect investing activities, not operating activities.
c. the cash disbursements for these accrued expenses will be made in a future period.
d. these expenses are recognized for accounting purposes, but they do not represent economic costs.