The cash flow from operating activities is calculated in the same way, whether the company uses the direct or the indirect method of preparing the statement of cash flow. The only difference is the way the financing activities section is prepared.

Question

Quizplus · Accepted Answer

The difference between the direct and indirect methods lies in how the cash flow from operating activities is calculated, not in the financing activities section. The direct method lists all cash receipts and payments from operating activities, while the indirect method starts with net income and adjusts for non-cash transactions and changes in working capital.

The Cash Flow from Operating Activities Is Calculated in the Same