In preparing the operating activities section of the statement of cash flows, most companies in Canada prefer to
A)use the direct method.
B)use the indirect method.
C)present both the indirect and direct methods in their financial reports.
D)prepare the operating activities section on the accrual basis.

Question

Quizplus · Accepted Answer

Most companies in Canada prefer to use the indirect method for preparing the operating activities section of the statement of cash flows because it starts with net income and adjusts for non-cash transactions, making it easier for companies to reconcile their cash flows with their income statements.

In Preparing the Operating Activities Section of the Statement of Cash