The direct method of preparing the operating activities section of the statement of cash flows ________.
A)lists each important item of cash inflows from operating activities
B)lists each important item of cash outflows from investing activities
C)adjusts accrual-basis income
D)adjusts cash-basis income

Question

Quizplus · Accepted Answer

The direct method of preparing the operating activities section of the statement of cash flows lists each important item of cash inflows from operating activities. This approach shows the actual cash flows that occurred during the period, rather than adjusting accrual-basis income or cash-basis income.

The Direct Method of Preparing the Operating Activities Section of the Statement