The direct method and the indirect method are alternative presentations for presenting cash flows from
A)investing activities.
B)operating activities.
C)financing activities.
D)research activities.

Question

Quizplus · Accepted Answer

The direct method and the indirect method are alternative presentations for presenting cash flows from operating activities. These methods describe how cash was generated and used during the period from operating activities such as sales, inventory, and expenses. The direct method reports cash inflows and outflows from operating activities independently, whereas the indirect method adjusts net income for non-cash items such as depreciation, changes in working capital, and other items to derive cash flow from operating activities.

The Direct Method and the Indirect Method Are Alternative Presentations