If the direct method is used to report cash flows from operating activities in the body of the statement of cash flows, a reconciliation of net income to net cash flows from operating activities also is required.

Question

Quizplus · Accepted Answer

This is true. The direct method reports actual cash inflows and outflows from operating activities, but a reconciliation is still required to show how net income was adjusted to arrive at the net cash flows from operating activities.

If the Direct Method Is Used to Report Cash Flows