Which of the following statements is true of the direct and indirect methods of preparing the statement of cash flows?

Question

Quizplus · Accepted Answer

Both the direct and indirect methods will ultimately result in the same net cash flow from operating activities. The difference between the two methods lies in how this amount is calculated and presented. The investing and financing activities sections may also differ slightly between the two methods, but they will ultimately result in the same overall change in cash for the period. Option B is incorrect, as the financing activities section may also differ between the two methods. Option C is also incorrect, as both methods should show the same types of cash flows. Option D is partially correct, as the operating activities section will ultimately show the same net cash flow, but the method of calculation and presentation may differ.

Which of the Following Statements Is True of the Direct