The statement of cash flows (direct method) is prepared directly from
A) the balance sheet.
B) the activity in the cash account.
C) the activity in the retained earnings account.
D) the amounts that appear on the income statement.

Question

Quizplus · Accepted Answer

The statement of cash flows (direct method) is prepared directly from the activity in the cash account, as it involves adjusting the items on the income statement to reflect the cash transactions.

The Statement of Cash Flows (Direct Method) Is Prepared Directly