The indirect method of preparing the operating section of the statement of cash flows:
A)is the least popular method used.
B)reports all cash receipts and cash payments from operating activities.
C)reconciles net income to net cash provided by operating activities.
D)reports different amounts for investing and financing activities than the direct method.

Question

Quizplus · Accepted Answer

The indirect method reconciles net income to net cash provided by operating activities, making adjustments for non-cash items and changes in current assets and liabilities. It is a commonly used method for preparing the operating section of the statement of cash flows.

The Indirect Method of Preparing the Operating Section of the Statement