The direct method involves listing specific operating cash inflows and outflows, while the indirect method shows net income adjustments.

Question

Quizplus · Accepted Answer

The direct method lists specific cash receipts and payments, showing actual cash flows from operating activities, while the indirect method starts with net income and adjusts for non-cash transactions and changes in working capital to arrive at cash flow from operating activities.

The Direct Method Involves Listing Specific Operating Cash Inflows and Outflows