In developing the cash flows from operating activities, most companies in the United States

Question

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Most companies in the United States use the indirect method to develop the cash flows from operating activities. The direct method is rarely used because it requires more detailed information and can be more difficult and time-consuming to prepare. However, companies are required to provide a reconciliation between net income and cash flows from operating activities using both the indirect and direct methods in their financial reports. The operating activities section is prepared on the accrual basis for both methods.

In Developing the Cash Flows from Operating Activities, Most Companies