Under the direct method, cash payments are outflows of cash, and any change with a positive cash effect is:
A) added.
B) subtracted.
C) no change.
D) None of the above are true.

Question

Quizplus · Accepted Answer

Under the direct method of preparing a cash flow statement, cash payments are indeed outflows of cash. Any change that has a positive cash effect, such as an increase in cash receipts, is added to calculate the net cash flow.

Under the Direct Method, Cash Payments Are Outflows of Cash