Which of the following statements is true regarding the Financial Accounting Standards Board (FASB)and reporting operating activities on the statement of cash flows?
A)The direct method is required of large companies.
B)The FASB prefers the indirect method.
C)The FASB prefers the direct method.
D)The FASB did not express a preference for either the direct or indirect method.

Question

Quizplus · Accepted Answer

The Financial Accounting Standards Board (FASB) prefers the direct method for reporting operating activities on the statement of cash flows because it provides a clearer picture of cash flows from operating activities. However, most companies use the indirect method due to its simplicity and the fact that it is less costly to implement.

Which of the Following Statements Is True Regarding the Financial