The direct method, also called the reconciliation method, reports cash receipts and cash disbursements from operating activities.

Question

Quizplus · Accepted Answer

The direct method reports cash receipts and cash disbursements from operating activities, but it is not called the reconciliation method. The reconciliation method refers to the indirect method, which adjusts net income for non-cash transactions and changes in working capital.

The Direct Method, Also Called the Reconciliation Method, Reports Cash