Using the indirect method for presenting operating activities may yield a higher or lower total amount for operating activities, depending on the nature and timing of expenditures.

Question

Quizplus · Accepted Answer

The indirect method for presenting operating activities starts with net income and adjusts for non-cash items and changes in working capital, leading to the same total amount for operating activities as the direct method, just presented differently. The nature and timing of expenditures affect the composition of cash flows, not the total amount under this method.

Using the Indirect Method for Presenting Operating Activities May Yield