The direct method for preparing and reporting the statement of cash flows reports net income and then adjusts it for items necessary to calculate net cash provided or used by operating activities.

Question

Quizplus · Accepted Answer

The direct method for preparing the statement of cash flows involves reporting major classes of gross cash receipts and payments for operating activities, not starting with net income and adjusting it. The method you described is the indirect method.

The Direct Method for Preparing and Reporting the Statement of Cash