Question

A statement of cash flows prepared for a nongovernmental not-for-profit college or university following FASB standards:

A) Must use the indirect method.
B) May use the direct or indirect method.
C) Must use the direct method.
D) None of the above.

Answer 1

A nongovernmental not-for-profit college or university following FASB standards may use either the direct or indirect method for preparing the statement of cash flows.

Step-by-step explanation:

The student is asking whether a statement of cash flows prepared for a nongovernmental not-for-profit college or university following Financial Accounting Standards Board (FASB) standards must use the indirect method, the direct method, or if there's a specific method that is required. According to the FASB standards, nongovernmental not-for-profit organizations may use either the direct or indirect method for reporting the statement of cash flows. Therefore, the correct answer to the question is B) May use the direct or indirect method.