A Statement of Cash Flows using the direct method and one using the indirect method will each produce the same amount of net cash flow from operating activities.

Question

Quizplus · Accepted Answer

Both the direct and indirect methods ultimately measure the same net cash flow from operating activities, which is why the answer is true. However, the direct method presents the cash inflows and outflows of operating activities in a more detailed and transparent manner, while the indirect method adjusts net income to arrive at the net cash flow from operating activities.

A Statement of Cash Flows Using the Direct Method and One