Generally Accepted Accounting Principles prefer which method of computing cash flow from operating activities?
A)Combination method
B)Direct method
C)Indirect method
D)Adjusting method

Question

Quizplus · Accepted Answer

The Direct method is preferred as it shows the actual cash inflow and outflow directly related to operating activities. The Combination method involves both Direct and Indirect methods, and the Indirect method is less preferable because it starts with net income and adjusts for non-cash transactions, making it less straightforward. The Adjusting method is not a commonly used method for computing cash flow from operating activities.

Generally Accepted Accounting Principles Prefer Which Method of Computing Cash