Which of the following statements concerning the statement of cash flows is true?
A) The statement of cash flows is usually more accurate when using the indirect method.
B) If the direct method is used a supplementary schedule reconciling the net income to net cash from operating activities must still be provided.
C) The statement of cash flows reflects both earnings per share and cash per share.
D) The statement of cash flows is an optional financial statement for external reporting purposes.

Question

Quizplus · Accepted Answer

According to GAAP, if the direct method is used, a supplementary schedule reconciling the net income to net cash from operating activities must still be provided. The statement of cash flows is required, not optional, for external reporting purposes. The statement of cash flows does not reflect earnings per share or cash per share, as it reports cash inflows and outflows, not earnings or share values. The indirect method may be used, but there is no general rule that it is more accurate than the direct method.

Which of the Following Statements Concerning the Statement of Cash