Which method of preparing the statement of cash flows starts with the components of income, the individual revenues and expenses, but not gains and losses, then adds or subtracts the same balance sheet changes involving the same operating accounts?
A)direct method
B)fixed method
C)indirect method
D)funds flow method
E)predetermined method

Question

Quizplus · Accepted Answer

The direct method of preparing the statement of cash flows involves starting with the components of income, specifically the individual revenues and expenses (excluding gains and losses), and then adjusting for changes in the balance sheet accounts that affect operating activities. This method presents the specific cash flows associated with operating activities directly.

Which Method of Preparing the Statement of Cash Flows Starts