Which of the following statements about the reporting of operating cash flows using the direct method is correct?
A)Although most U.S.companies use the indirect method,the Financial Accounting Standards Board (FASB)prefers the direct method of accounting for cash flows from operating activities.
B)The FASB prefers the indirect method of calculating cash flows from operating activities because it gives a more accurate calculation of cash provided by operating activities.
C)The direct method results in a larger amount of cash flow from operating activities than does the indirect method.
D)The direct and indirect methods use different presentations for cash flows from investing and financing activities.

Question

Quizplus · Accepted Answer

FASB prefers the use of the direct method,but currently permits use of either the direct or the indirect method.Approximately 99% of U.S.companies use the indirect method.The two methods are simply a different way to arrive at the same number for cash flows from operating activities.The investing and financing activities sections are presented the same using either method.

Which of the Following Statements About the Reporting of Operating