Income statement items that have no cash effect are still reported under the direct method.Income statement items that have no cash effect are simply not reported under the direct method.

Question

Quizplus · Accepted Answer

The direct method of presenting cash flows from operating activities reports all income statement items that affect cash flows, regardless of whether they have a direct cash effect or not. Non-cash items such as depreciation, amortization, and deferred taxes are reported in a separate section under the direct method.

Income Statement Items That Have No Cash Effect Are Still