In developing the cash flows from operating activities, most companies in Canada prefer to
A) use the direct method.
B) use the indirect method.
C) present both the indirect and direct methods in their financial reports.
D) prepare the operating activities section on the accrual basis.

Question

Quizplus · Accepted Answer

Most companies in Canada prefer to use the indirect method for developing the cash flows from operating activities because it starts with net income and adjusts for non-cash transactions and changes in working capital, which is often seen as easier to prepare and understand.

In Developing the Cash Flows from Operating Activities, Most Companies