Most public companies use the direct method to prepare their statement of cash flows because the computations are simpler.

Question

Quizplus · Accepted Answer

The indirect method is actually more commonly used by public companies, as it starts with net income and adjusts for non-cash items and changes in working capital to arrive at the cash flows from operating activities. While the direct method may provide more detailed information on the sources and uses of cash, it requires more extensive information and calculations.

Most Public Companies Use the Direct Method to Prepare Their