Which phrase below best describes the direct method for reporting operating cash flows?
A)A method that incorporates financing and investing activities into cash flows from operations.
B)A method employing accrual-based accounting to convert cash flows to GAAP Net Income.
C)A summary of operating transactions resulting in either a debit or credit to cash.
D)A series of adjustments to Net Income to arrive at operating cash flows.

Question

Quizplus · Accepted Answer

The direct method reports operating cash flows by summarizing all operating transactions that result in changes to cash (debits or credits).It is based on converting accrual-based amounts for revenues and expenses into cash flows received or made by the company.

Which Phrase Below Best Describes the Direct Method for Reporting