Asked by Adrian Rogalski on Jun 14, 2024
Verified
Current GAAP for preparing the statement of cash flows using the direct method requires cash flows from "interest paid" and "interest received" to be shown as operating activities.
Current GAAP
Generally Accepted Accounting Principles as they are presently defined and practiced in the United States for financial reporting.
Direct Method
A way of reporting cash flows from operating activities by showing major classes of gross cash receipts and payments.
Operating Activities
Operating activities involve the primary day-to-day functions of a business related to producing and selling its goods or services.
- Identify the distinctions in cash flow reporting mandates between the U.S. Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS).
- Recognize cash flow reporting requirements for specific transactions under current GAAP.
Verified Answer
ON
Olivia NicoleJun 15, 2024
Final Answer :
True
Explanation :
Under the direct method of preparing the statement of cash flows, interest paid and interest received are both shown as operating activities. This is in compliance with current GAAP (Generally Accepted Accounting Principles) for preparing the statement of cash flows.
Learning Objectives
- Identify the distinctions in cash flow reporting mandates between the U.S. Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS).
- Recognize cash flow reporting requirements for specific transactions under current GAAP.