Most companies use the indirect method of reporting cash from operating activities.

Question

Quizplus · Accepted Answer

The indirect method is the most commonly used method for reporting operating cash flows in the statement of cash flows. This method adjusts net income for non-cash items and changes in working capital accounts to arrive at the cash provided or used by operating activities. The direct method, on the other hand, reports actual cash inflows and outflows from operating activities. However, the direct method is less commonly used due to its more detailed and time-consuming nature.

Most Companies Use the Indirect Method of Reporting Cash from Operating