Which method of preparing the operating activities section of a statement of cash flows reports its cash inflows from operations followed by its cash outflows for operation?
A) The direct method
B) The indirect method
C) Both the direct method and the indirect method
D) Neither the direct method nor the indirect method

Question

Quizplus · Accepted Answer

The direct method of preparing the operating activities section of a statement of cash flows directly reports the cash inflow and outflow items related to operating activities, such as cash collected from customers, cash paid to suppliers, cash paid for salaries, and interest paid. It provides a more detailed and transparent view of a company's operating cash flows compared to the indirect method.

Which Method of Preparing the Operating Activities Section of a Statement