Which of the following is true about indirect method?
A) An entity's election to use the indirect method does not affect the amount presented as a net cash flow.
B) The indirect method is used for cash flows from operating, financing, and investing activities.
C) Compared to the direct method, the indirect method provides more useful information for projecting an entity's future cash flows.
D) The indirect method shows an entity's major operating gross cash receipts and gross cash payments during the period.
E) More than one of the above.

Question

Quizplus · Accepted Answer

The indirect method of reporting cash flows from operating activities starts with net income and adjusts for non-cash transactions and changes in working capital, thus not affecting the total amount of net cash flow presented compared to the direct method.

Which of the Following Is True About Indirect Method