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 a 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

If the direct method is used, a supplementary schedule reconciling the net income to net cash from operating activities must still be provided. While the indirect method starts with net income and adjusts for non-cash items, the direct method reports cash receipts and payments. However, the direct method still requires a reconciliation to show how cash flows from operating activities were derived. Statements of cash flows are required for external reporting purposes, and both the direct and indirect methods are acceptable. Earnings per share and cash per share are not reflected in the statement of cash flows.

Which of the Following Statements Concerning the Statement of Cash