Which of the following is not true regarding the direct and indirect methods of computing net cash flow from operating activities?
A)Both methods result in the same dollar amount of cash flow from operating activities.
B)Both methods involve adjusting entries to the company's books so that the accounting records reflect the figures shown in the statement of cash flows.
C)Both methods are acceptable to the FASB for reporting purposes.
D)Both methods convert accrual-based income statement amounts to cash flow results.

Question

Quizplus · Accepted Answer

The direct and indirect methods of computing net cash flow from operating activities do not involve adjusting entries to the company's books. The adjustments are made within the cash flow statement itself to reconcile net income to net cash provided by operating activities (indirect method) or to present cash receipts and payments (direct method).

Which of the Following Is Not True Regarding the Direct