Most public companies use the indirect method to prepare their statement of cash flows because it is the method the FASB prefers.

Question

Quizplus · Accepted Answer

The FASB allows both the direct and indirect methods for preparing the statement of cash flows, but most public companies use the indirect method because it is easier to prepare from the information available in their accounting systems, not because of a preference by the FASB.

Most Public Companies Use the Indirect Method to Prepare Their