The direct method of reporting operating cash flows:
A) Is considered supplementary disclosure.
B) Is not recommended by the FASB, but is commonly used.
C) Is used by most companies.
D) Must be used by all companies.
E) Is recommended but not required by the FASB.

Question

Quizplus · Accepted Answer

The direct method of reporting operating cash flows is recommended but not required by the FASB. It is considered a more informative approach to presenting cash flows from operating activities but is not commonly used as it requires more detailed information and can be more time-consuming.

The Direct Method of Reporting Operating Cash Flows