For external reporting purposes, the FASB recommends the indirect method of determining the net cash provided by operating activities on the statement of cash flows.

Question

Quizplus · Accepted Answer

The FASB allows both the direct and indirect methods for reporting cash flows from operating activities, but it does not specifically recommend one over the other. However, the indirect method is more commonly used in practice.

For External Reporting Purposes, the FASB Recommends the Indirect Method