Evita Corporation prepares its statement of cash flows using the indirect method. Evita's statement showed "Net cash provided by operating activities" of $46,000. Under the direct method, this number would have been:
A)$0.
B)$46,000.
C)greater than $46,000.
D)less than $46,000 but greater than $0.

Question

Quizplus · Accepted Answer

Under the indirect method, Net cash provided by operating activities includes adjustments for non-cash items such as depreciation and changes in working capital. Under the direct method, actual cash inflows and outflows from operating activities are reported. Since the net cash provided by operating activities is already reported as $46,000 under the indirect method, the answer would be the same ($46,000) under the direct method. Therefore, the correct answer is B.

Evita Corporation Prepares Its Statement of Cash Flows Using the Indirect