Corporations do not commonly use the direct method for the Statement of Cash Flows because
A)of the many additional disclosures and schedules that must accompany the statement.
B)the FASB prefers the indirect method.
C)the direct method does not follow GAAP.
D)there are fewer disclosures required under the indirect method.

Question

Quizplus · Accepted Answer

The direct method for the Statement of Cash Flows requires a detailed disclosure of cash receipts and payments, which often necessitates additional schedules and disclosures compared to the indirect method. This complexity and the additional effort required to prepare these disclosures are why corporations commonly prefer the indirect method.

Corporations Do Not Commonly Use the Direct Method for the Statement