The direct method of preparing the operating activities section of the statement of cash flows begins with profit under accrual timing and then adjusts it to cash flow from operations.

Question

Quizplus · Accepted Answer

The direct method of preparing the operating activities section of the statement of cash flows begins with the actual cash inflows and outflows related to operating activities, rather than starting with profit under accrual timing. The indirect method starts with net income and adjusts it to cash flow from operations.

The Direct Method of Preparing the Operating Activities Section of the Statement