The FASB encourages the use of which method to prepare the cash flows from the operating activities section of the statement of cash flows?

1. indirect method
2. recognition method
3. direct method
4. matching method

20b. The correction of prior material error is reported on which statement?

1. balance sheet
2. statement of retained earnings
3. income statement
4. statement of cash flows

3. A companys operating cycle might be measured as
   1. Total asset turnover in days minus fixed asset turnover in days.
   2. Total asset turnover in days minus fixed asset turnover in days minus inventory turnover in days minus accounts receivable turnover in days.
   3. Inventory turnover in days plus accounts receivable turnover in days plus accounts payable turnover in days.
   4. Inventory turnover in days plus accounts receivable turnover in days minus accounts payable turnover in days.