Which of the following statements regarding use of the direct and indirect methods of determining cash flows from operating activities is incorrect?
A)The indirect method starts with net income.
B)The direct method calculates cash collected from customers.
C)The majority of U.S.companies use the indirect method.
D)The FASB recommends use of the indirect method.

Question

Quizplus · Accepted Answer

The FASB does not recommend the use of either method. However, they do require companies to provide a reconciliation of net income to cash flows from operating activities using either the direct or indirect method.

Which of the Following Statements Regarding Use of the Direct