The net cash flow from operating activities is calculated in the same way, whether the company uses the direct or the indirect method of preparing the statement of cash flow. The only difference in the two methods is the way the financing activities section is prepared.

Question

Quizplus · Accepted Answer

The direct and indirect methods differ not only in the financing activities section, but also in the way operating activities section is prepared. The direct method presents actual cash inflows and outflows, while the indirect method starts with net income and adjusts for non-cash items and changes in working capital. However, both methods ultimately result in the same net cash flow from operating activities.

The Net Cash Flow from Operating Activities Is Calculated in the Same