The FASB requires that a company using the direct method must provide a reconciliation between net income and cash from operating activities.

Question

Quizplus · Accepted Answer

This is true. The FASB requires that companies using the direct method for reporting cash flows from operating activities must also provide a reconciliation of net income to cash provided or used by operating activities. This reconciliation typically shows the adjustments made to net income to arrive at the cash flow from operating activities.

The FASB Requires That a Company Using the Direct Method