Cash flows from operating activities can be calculated using:
A) the direct method.
B) the indirect method.
C) either the direct or indirect method.
D) none of the above.

Question

Quizplus · Accepted Answer

Cash flows from operating activities can be calculated using either the direct or indirect method, so both options are valid. The direct method reports cash receipts and payments directly related to operating activities, while the indirect method adjusts net income for non-cash items and changes in current assets and liabilities to arrive at the operating cash flow. Each method has its advantages and disadvantages, but both ultimately provide useful information for analyzing the cash flows of a business.

Cash Flows from Operating Activities Can Be Calculated Using