What method does AASB 107 require for the reporting of cash flows from operating activities and what does it mean for the presentation of this category in the statement of cash flows?
A) The derivative method is required. This means that the amounts are presented as increases or decreases in balance sheet working capital accounts.
B) The indirect method is required. This means that the cash flows are presented as accrual amounts from the operating section of the income statement adjusted for non-cash effects.
C) The direct method is required. This means that the gross cash flows from operating items are presented.
D) Either the derivative method is required. This means that the amounts are presented as increases or decreases in balance sheet working capital accounts or the direct method is required. This means that the gross cash flows from operating items are presented is permitted.
E) None of the given answers.

Question

Quizplus · Accepted Answer

AASB 107 requires the direct method for reporting cash flows from operating activities. This means that the gross cash inflows and outflows related to operating activities are presented, providing a more detailed picture of the company's operating cash flows. Presentation under the direct method can also aid users of financial statements in analyzing the company's ability to generate cash from operations.

What Method Does AASB 107 Require for the Reporting of Cash