A supplementary schedule reconciling net income to net cash flow from operating activities is
A)not needed when using the direct method.
B)part of the income statement.
C)needed when using the direct method.
D)part of the balance sheet.
E)used by investors to determine earnings per share.

Question

Quizplus · Accepted Answer

The supplementary schedule reconciling net income to net cash flow from operating activities is only needed when using the direct method. This is because the direct method does not show a clear link between net income and operating cash flows, so this schedule is necessary to adjust for non-cash transactions and other factors that affect cash flow.

A Supplementary Schedule Reconciling Net Income to Net Cash Flow