Which method of preparing the operating activities section of a statement of cash flows reports major classes of gross cash receipts and cash payments for revenues and expenses?
A)the direct method
B)the indirect method
C)Both the direct method and the indirect method.
D)Neither the direct method nor the indirect method.

Question

Quizplus · Accepted Answer

The direct method is the method of preparing the operating activities section of a statement of cash flows that reports major classes of gross cash receipts and cash payments for revenues and expenses. It shows actual cash inflows and outflows, rather than adjustments made to net income. The indirect method shows adjustments made to net income to convert it to cash flows from operating activities.

Which Method of Preparing the Operating Activities Section of a Statement