If the direct method is used to prepare a statement of cash flows,the cost of goods sold from the income statement will be adjusted

Question

Quizplus · Accepted Answer

The cost of goods sold from the income statement will be adjusted for both changes in inventory to arrive at net purchases and changes in accounts payable to arrive at cash payments for purchases in the indirect method. By adjusting for these changes, the direct method provides a more accurate picture of cash flows related to operating activities.

If the Direct Method Is Used to Prepare a Statement