Which of the following statements is true of the direct and indirect methods of preparing the statement of cash flows?
A)The indirect method and the direct method will produce the same amount of net cash flow from operating activities.
B)The investing activities section is the only section that differs between the direct and indirect methods.
C)The indirect method shows three types of cash flows,but the direct method does not.
D)There is no difference in the way the operating activities section is presented.

Question

Quizplus · Accepted Answer

Both the direct and indirect methods of preparing the statement of cash flows arrive at the same net cash flow from operating activities, but they differ in the way the information is presented. The investing and financing activities sections are identical in both methods. Therefore, choice A is the correct answer. Choices B and C are incorrect, and choice D is misleading.

Which of the Following Statements Is True of the Direct