If a company uses the indirect method to prepare its statement of cash flows,it must provide a supplementary schedule showing the computation of net cash flow from operating activities using the direct method.

Question

Quizplus · Accepted Answer

The Financial Accounting Standards Board (FASB) encourages but does not require companies to report the cash flow from operating activities using both the direct and indirect methods. If a company chooses the indirect method, it is not mandated to also provide a direct method reconciliation.

If a Company Uses the Indirect Method to Prepare Its