With reference to the reporting of net cash flow from operating activities, which method do most companies use and why?
A) Indirect method because it provides better information for decision making
B) Direct method because it is based on the accrual basis of accounting
C) Direct method because it requires a supplemental indirect method section
D) Indirect method because it is less expensive to prepare

Question

Quizplus · Accepted Answer

The indirect method is easier and cheaper because it takes less time. The direct method requires an additional step in that companies must also present a supplemental indirect method section.

With Reference to the Reporting of Net Cash Flow from Operating