Which of the following statements about the statement of cash flows is TRUE?
A) The indirect method and the direct method will both show the same end results.
B) The direct method begins with net income and adjusts to calculate operating cash flows.
C) The indirect method shows three types of cash flows, but the direct method does not.
D) The operating activities section of both the direct and the indirect method are the same.

Question

Quizplus · Accepted Answer

The indirect and direct methods of preparing the statement of cash flows both aim to present the same final cash balance, but they differ in their presentation of operating activities. The indirect method starts with net income and adjusts for non-cash transactions and changes in working capital, while the direct method lists actual cash receipts and payments.

Which of the Following Statements About the Statement of Cash