Asked by
Verified
The direct 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 and cash payments.
B) Reports adjustments to reconcile net income to net cash provided or used by operating activities in the statement.
C) Reports a different amount of cash flows from operations than if the indirect method is used.
D) Is required if the company is a merchandiser.
E) Is required by the FASB.
Direct Method
A method of reporting cash flows from operating activities by showing major classes of gross cash receipts and payments.
Operating Activities
Activities that relate directly to the business's primary operations and functions, including sales, distribution, and production, influencing the day-to-day profitability.
Cash Receipts
The collection of money, including cash and checks, received by a business during a specific period.
- Know the difference between direct and indirect methods for preparing the operating activities section of the statement of cash flows.
Verified Answer
Learning Objectives
- Know the difference between direct and indirect methods for preparing the operating activities section of the statement of cash flows.
Related questions
The Reporting of Net Cash Provided or Used by Operating ...
The First Line Item in the Operating Activities Section of ...
The Direct Method of Reporting Operating Cash Flows ...
When Using the Spreadsheet (Work Sheet) Method to Analyze Noncash ...
When Using the Spreadsheet (Work Sheet) Method for the Statement ...