In developing the cash flows from operating activities, standard setters prefer to
A) use the direct method.
B) use the indirect method.
C) present both the indirect and direct methods in their financial reports.
D) prepare the operating activities section on the accrual basis.

Question

Quizplus · Accepted Answer

Standard setters prefer the direct method for reporting cash flows from operating activities because it provides a clearer picture of cash receipts and payments.

In Developing the Cash Flows from Operating Activities, Standard Setters