Which of the following statements regarding the reporting of operating cash flows using the direct method is true?
A) The Financial Accounting Standards Board (FASB) prefers the direct method of accounting for cash flows from operating activities.
B) The FASB prefers the indirect method of calculating cash flows fro m operations because it gives a more accurate calculation of cash provided by operating activities.
C) The direct method results in a larger amount of cash flow from operating activities than does the indirect method.
D) The direct and indirect methods use different presentations for cash flows from investing and financing activities.

Question

Quizplus · Accepted Answer

The first statement is true. The FASB prefers the direct method of accounting for cash flows from operating activities because it provides more detailed information and greater transparency in the presentation of cash flows from operations. However, both the direct and indirect methods are acceptable under Generally Accepted Accounting Principles (GAAP).

Which of the Following Statements Regarding the Reporting of Operating