The direct method of preparing the statement of cash flows:
A)is preferred by FASB.
B)reports where cash came from and how it was spent on operating activities.
C)is much easier for companies to compute.
D)is both A and B.

Question

Quizplus · Accepted Answer

The direct method of preparing the statement of cash flows is preferred by FASB as it provides detailed information on where cash came from and how it was spent on operating activities. While the direct method can be more time-consuming to compute, it provides a clearer understanding of a company's cash position and cash flow activities.

The Direct Method of Preparing the Statement of Cash Flows