Which statement is true with respect to the preparation of the cash flows from operating activities' section?
A)It can be calculated by using the direct or indirect methods.
B)Cash flows are calculated as the difference between revenues and expenses.
C)It is always equal to accrual accounting income.
D)Cash payments for depreciation and dividends are reported in the operating activates sections.

Question

Quizplus · Accepted Answer

The cash flows from operating activities section can be prepared using either the direct or indirect method. The direct method involves directly identifying the cash inflows and outflows from operating activities, while the indirect method adjusts the net income for non-cash items and changes in working capital to arrive at the cash flows from operating activities.

Which Statement Is True with Respect to the Preparation of the Cash