The method of reporting cash flows from operating activities under which revenues and expenses on the income statement are adjusted to reflect the amount of cash received or expended for each item is the:
A) direct method.
B) indirect method.
C) combination method.
D) adjustment method.

Question

Quizplus · Accepted Answer

The direct method of reporting cash flows from operating activities involves adjusting the income statement's revenues and expenses to reflect the actual cash received or spent, rather than using accrual accounting figures.

The Method of Reporting Cash Flows from Operating Activities Under