Which of the following observations concerning the comparisons between the direct and indirect approaches of presenting a cash flow statement is true?
A) The final number of cash flows from operating activities is different under the two approaches.
B) The direct approach provides a clearer picture of cash flows related to operations.
C) Authoritative bodies have generally expressed a preference for the indirect method.
D) A separate reconciliation of operating cash flows and net income is required under the indirect approach.

Question

Quizplus · Accepted Answer

The direct approach is more detailed and provides a clearer picture of the cash flows related to operations, while the indirect method starts with net income and adjusts for non-cash items and changes in current assets and liabilities, making it less clear. The other statements in the options are not necessarily true or are incomplete.

Which of the Following Observations Concerning the Comparisons Between the Direct