A major disadvantage of the indirect method of reporting cash flows from operating activities is that the difference between the net amount of cash flows from operating activities and net income is emphasized.

Question

Quizplus · Accepted Answer

The indirect method starts with net income and adjusts for non-cash transactions and changes in working capital, thus it does not emphasize the difference between cash flows from operating activities and net income but rather reconciles the two.

A Major Disadvantage of the Indirect Method of Reporting Cash