When using the direct method to determine the net cash flows from operating activities,major categories would not include:
A)Cash received from customers.
B)Cash paid for salaries.
C)Cash paid for dividends.
D)Cash paid for inventory.

Question

Quizplus · Accepted Answer

The direct method focuses on cash inflows and outflows directly related to operating activities. Cash paid for dividends would be classified as a financing activity, not an operating activity. Therefore, it would not be included in the major categories of the net cash flows from operating activities.

When Using the Direct Method to Determine the Net Cash