Income statement items that have no cash effect are still reported under the direct method.

Question

Quizplus · Accepted Answer

The direct method reports all cash transactions and their effects on cash during the period. Therefore, income statement items that have no cash effect are simply not reported under the direct method. However, under the indirect method, these items may be reported in order to reconcile net income to net cash provided by operating activities.

Income Statement Items That Have No Cash Effect Are Still