Which of the following is not an advantage of using the indirect method to prepare the statement of cash flows?
A)The indirect method provides a link between net income and cash flows from operating activities by reconciling the two amounts.
B)The indirect method typically takes less time to prepare than the direct method..
C)Accounting systems are better suited to generate information needed for the indirect method.
D)The indirect method is more accurate than the direct method.
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

The statement that the indirect method is more accurate than the direct method is false. The direct method is generally considered to be more accurate because it provides a more detailed, complete picture of the company's cash inflows and outflows.

Which of the Following Is Not an Advantage of Using