The only difference between the direct and indirect methods of preparing the statement of cash flows is the manner in which the
A)cash flows from financing activities is presented.
B)the schedule of non-cash items is presented.
C)cash flows from operating activities is presented.
D)cash flows from investing activities is presenteD.The direct and indirect methods only relate to cash flows from operating activities.

Question

Quizplus · Accepted Answer

The only difference between the direct and indirect methods of preparing the statement of cash flows is the presentation of cash flows from operating activities. Both methods present cash flows from financing and investing activities in the same manner. However, the direct method reports the actual cash inflows and outflows from operating activities, while the indirect method starts with net income and adjusts for non-cash items and changes in working capital to arrive at the operating cash flows.

The Only Difference Between the Direct and Indirect Methods of Preparing