The direct method restates the income statements in terms of cash.

Name: The direct method restates the income statements in terms of cash.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The direct method is used to present the operating activities section of the statement of cash flows in terms of actual cash inflows and outflows. It starts with the company's net income and then makes adjustments to convert non-cash items such as depreciation, amortization, and deferred taxes into cash transactions.

The Direct Method Restates the Income Statements in Terms of Cash