When the operating activities section of the statement of cash flows is reported using the direct method,the FASB requires:
A)The preparation of the statement of cash flows under the indirect method be completed and reported with the statement of cash flows prepared using the direct method.
B)A reconciliation of net income to net cash provided or used by operating activities.
C)Footnotes to the financial statements disclosing the difference between net income and the cash provided or used by financing activities.
D)The income statement to be prepared under the cash basis of accounting.
E)Noncash investing and financing activities be included in the statement of cash flows.

Question

Quizplus · Accepted Answer

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when using the direct method for reporting operating activities in the statement of cash flows. This reconciliation provides more detailed information about the components of operating cash flows and helps users understand the relationship between net income and cash flows from operating activities.

When the Operating Activities Section of the Statement of Cash