The direct method of preparing a statement of cash flows
A) is the overwhelming choice of most companies.
B) begins with net income in the operating activities section.
C) is more difficult to understand than the indirect method for the average reader.
D) will produce the same net figure as the indirect method.

Question

Quizplus · Accepted Answer

The direct method and the indirect method will both produce the same net cash flow from operating activities, even though they approach the calculation differently.

The Direct Method of Preparing a Statement of Cash Flows