If a firm uses the direct method for reporting operating activities on the statement of cash flows, it must present a separate schedule which reconciles net income to net cash from operating activities.

Question

Quizplus · Accepted Answer

This statement is true. Under the direct method, the company reports cash inflows and outflows from operating activities directly on the statement of cash flows. However, a separate schedule must be presented which reconciles net income to net cash from operating activities, providing details on the sources and uses of cash for operating activities.

If a Firm Uses the Direct Method for Reporting Operating