Using the direct method of preparing the statement of cash flows,which of the following information must we have to adjust the reported revenues and expenses?
A)The income statement only
B)The balance sheet only
C)Both the income statement and the balance sheet
D)Neither the income statement nor the balance sheet

Question

Quizplus · Accepted Answer

Both the income statement and the balance sheet are needed to adjust the reported revenues and expenses. The adjustments involve changes in current assets and liabilities, as well as non-cash transactions, which are reflected in both financial statements.

Using the Direct Method of Preparing the Statement of Cash