Which of the following statements is true regarding GAAP and reporting operating activities on the statement of cash flows?
A) The direct method is required of large companies.
B) GAAP expresses a preference for the indirect method.
C) GAAP expresses a preference for the direct method.
D) GAAP did not express a preference for either the direct or indirect method.

Question

Quizplus · Accepted Answer

GAAP (Generally Accepted Accounting Principles) expresses a preference for the direct method for reporting operating activities on the statement of cash flows because it provides more detailed information about cash flows from operating activities. However, it allows the use of the indirect method as well.

Which of the Following Statements Is True Regarding GAAP and Reporting