The direct method of preparing the statement of cash flows will show the same increase or decrease in cash as the indirect method.

Question

Quizplus · Accepted Answer

The direct method and the indirect method both ultimately result in the same increase or decrease in cash, as they are both designed to reconcile the beginning and ending cash balance. The difference lies in how they arrive at that result, with the direct method showing each individual cash inflow and outflow, while the indirect method adjusts from net income.

The Direct Method of Preparing the Statement of Cash Flows