In preparing net cash flow from operating activities using the direct method each item in the income statement is adjusted from the accrual basis to the cash basis.

Question

Quizplus · Accepted Answer

In the direct method of preparing the net cash flow from operating activities, each item in the income statement is adjusted from the accrual basis to the cash basis. This is done to calculate the actual cash inflows and outflows during the period rather than just the accrual based revenues and expenses.

In Preparing Net Cash Flow from Operating Activities Using the Direct