Although the guidance in U.S.GAAP and IFRS states a preference that companies present cash flows from operations using the _____, most companies present cash flows from operations as _____.
A)a reconciliation of net income to operating cash flow (the direct method); direct method
B)direct method; a reconciliation of net income to operating cash flow (the indirect method)
C)cash method; accrual method
D)accrual method; cash method
E)none of the above

Question

Quizplus · Accepted Answer

Both U.S.GAAP and IFRS recommend using the direct method to present cash flows from operations. However, many companies find it easier to use the indirect method, which involves a reconciliation of net income to operating cash flow. Therefore, most companies present cash flows from operations as a reconciliation of net income to operating cash flow (the indirect method).

Although the Guidance in U