The most widely used method for calculating operating cash flows is the _____.
A) indirect method
B) accrual method
C) direct method
D) high-low method

Question

Quizplus · Accepted Answer

The indirect method is the most widely used method for calculating operating cash flows as it starts with net income and makes adjustments to arrive at cash flows from operating activities. The direct method is an alternative method that reports actual cash inflows and outflows from operating activities. The accrual method is a method of accounting that recognizes revenues and expenses when they are earned or incurred, regardless of when cash is exchanged. The high-low method is a cost accounting technique used to separate mixed costs into their fixed and variable components.

The Most Widely Used Method for Calculating Operating Cash Flows