In calculating cash flow provided (used) by 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

This is correct. The direct method of calculating cash flow from operating activities involves adjusting items in the income statement from the accrual basis to the cash basis in order to calculate the cash received and paid out during the period.

In Calculating Cash Flow Provided (Used) by Operating Activities Using