Under IFRS firms are encouraged to use the direct method.The result is that firms that follow IFRS rarely use the indirect method of presenting cash flows from operating activities.

Question

Quizplus · Accepted Answer

While IFRS encourages the use of the direct method for reporting cash flows from operating activities, in practice, many firms that follow IFRS still commonly use the indirect method due to its simplicity and the ease of linking it to the accrual-based income statement.

Under IFRS Firms Are Encouraged to Use the Direct Method