The indirect method for the preparation of the operating activities section of the statement of cash flows:
A)Separately lists each major item of operating cash receipts.
B)Separately lists each major item of operating cash payments.
C)Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
D)Is required if the company is a merchandiser.
E)Must not be used in all circumstances.

Question

Quizplus · Accepted Answer

The indirect method lists net income and then adjusts it for items necessary to determine net cash provided or used by operating activities. This is the most commonly used method for preparing the operating activities section of the statement of cash flows.

The Indirect Method for the Preparation of the Operating Activities