When preparing a statement of cash flows,in which section is it permitted to use either the direct method or the indirect method?
A)Operating activities
B)Investing activities
C)Financing activities
D)All of these answer choices are correct

Question

Quizplus · Accepted Answer

The direct method or indirect method can be used for the operating activities section of the statement of cash flows. However, most companies tend to use the indirect method as it is perceived to be less time-consuming and costly compared to the direct method. The investing and financing activities sections of the statement of cash flows must be prepared using the indirect method.

When Preparing a Statement of Cash Flows,in Which Section Is