Only the operating activities section of a statement of cash flows is prepared differently when using the indirect method.

Question

Quizplus · Accepted Answer

When using the indirect method, the operating activities section of a statement of cash flows is prepared by adjusting net income for non-cash items and changes in current assets and liabilities, whereas the direct method presents actual cash inflows and outflows from operating activities. All other sections of the statement of cash flows (investing and financing activities) are prepared the same way regardless of whether the direct or indirect method is used.

Only the Operating Activities Section of a Statement of Cash