The direct method for the preparation of the operating activities section of the statement of cash flows:
A) Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
B) Separately lists each major item of operating cash receipts.
C) Separately lists each major item of operating cash payments.
D) Separately lists each major item of operating cash receipts and cash payments.
E) All of these answers are correct.

Question

Quizplus · Accepted Answer

The direct method lists each major item of operating cash receipts and cash payments separately in the operating activities section of the cash flow statement.

The Direct Method for the Preparation of the Operating Activities