Which of the following is a required separate disclosure for firms using the direct method in the statement of cash flows?
A) A reconciliation of net income to net cash flows from operating activities
B) A list of all noncash investing and financing transactions
C) The policy for determining which highly liquid, short-term investments are treated as cash equivalents
D) All of the above

Question

Quizplus · Accepted Answer

All of the choices listed are required disclosures for firms using the direct method in the statement of cash flows. A reconciliation of net income to net cash flows from operating activities helps users understand the adjustments made to convert accrual-based net income to cash-based figures. A list of all noncash investing and financing transactions provides insight into significant activities that do not impact cash but affect the financial position. The policy for determining cash equivalents clarifies what the company considers as cash for the purpose of the statement of cash flows.

Which of the Following Is a Required Separate Disclosure for Firms