Which of the following statements is true of the direct and indirect methods of preparing the statement of cash flows?
A)The indirect method and the direct method will produce the same amount of net cash flow from operating activities.
B)The direct method begins with Net Income and adjusts to calculate operating and investing cash flows.
C)The indirect method shows three types of cash flows, but the direct method does not.
D)The operating activities section of both the direct and the indirect methods are the same.

Question

Quizplus · Accepted Answer

The indirect and direct methods will both result in the same net cash flow from operating activities, but they differ in presentation. The indirect method adjusts net income for changes in balance sheet accounts, while the direct method lists cash receipts and payments.

Which of the Following Statements Is True of the Direct