What is the correct choice? Regarding the use of a spreadsheet for the preparati

Question

What is the correct choice?

Regarding the use of a spreadsheet for the preparation of the statement of cash flows, which of the following statements is true? A. The spreadsheet is needed when companies face complex situations. B. The spreadsheet can only be used if the indirect method for operating activities is also used. O C. The statement of cash flows cannot be prepared directly from the spreadsheet because additional information is needed. OD. The T-account approach works well for all companies

Explanation / Answer

Answer:A

Option B is wrong,because:

The spread sheet can be used both for the direct method and the indirect method in the preparation of the cash flow statement.

Option C is wrong,because:

The cash flow can be prepared directly in the spread sheet.

Option D is wrong,because:

T-account is a set of records which uses the double entry book keeping it is an informal term for the financial records. Thus the cash flow statement will not be prepared in the T-account format

Hence

Option A i.e When Companies face complex problems they can use Spreadsheet to prepare cash flow statement is correct

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