Which is the more widely-used method for preparing a statement of cash flows?
I Direct
II Indirect
A)I
B)II
C)It's an approximate 50/50 split between I and II.
D)Neither is a method used in preparing a statement of cash flows.
E)GAAP does not allow method I nor method II.

Question

Quizplus · Accepted Answer

The indirect method is more widely used for preparing a statement of cash flows.
Key Takeaway: While the direct method is actually recommended by the Financial Accounting Standards Board (FASB), it is rarely used. Approximately 1-2% of businesses use the direct method; the indirect method is preferred due to its simplicity.

Which Is the More Widely-Used Method for Preparing a Statement