The method of preparing the statement of cash flows used by the majority of firms is the
A)direct method.
B)indirect method.
C)revenue method.
D)dividend methoD.

Question

Quizplus · Accepted Answer

The majority of firms use the indirect method of preparing the statement of cash flows, which starts with net income and adjusts for non-cash items and changes in working capital to arrive at cash flows from operating activities. The direct method is an alternative approach that presents actual cash inflows and outflows from operating activities, but it is less commonly used due to its complexity and additional time and resources required for preparation. The revenue method and dividend method are not methods of preparing the statement of cash flows.

The Method of Preparing the Statement of Cash Flows Used