Using the direct method of preparing the statement of cash flows,to determine the cash effects of operating activities,which of the following needs to be adjusted?
A)Net income
B)Reported revenues and expenses
C)Long-term assets and liabilities from the balance sheet
D)Equity as reported in the balance sheet

Question

Quizplus · Accepted Answer

Reported revenues and expenses need to be adjusted to determine the cash effects of operating activities on the statement of cash flows prepared using the direct method. Net income, long-term assets and liabilities, and equity as reported in the balance sheet do not require adjustments for the direct method.

Using the Direct Method of Preparing the Statement of Cash