Choose the correct statement about the reconciliation of net income and net cash
ID: 2569574 • Letter: C
Question
Choose the correct statement about the reconciliation of net income and net cash flow from operations (NCF-operations), with regard to reporting the statement of cash flows (SCF). Recall that the reconciliation is one of four substantive sections of the SCF. The other three sections are the listings of the OIF cash flows.
a. the reconciliation is required to be reported only for the indirect method of reporting the SCF
b. the reconciliation is required to be reported only for the direct method of reporting the SCF
c. the reconciliation is required to be reported for both the direct and indirect methods of reporting the SCF
d. the reconciliation is an optional schedule
e. the reconciliation reports mainly operating cash flows
a. the reconciliation is required to be reported only for the indirect method of reporting the SCF
b. the reconciliation is required to be reported only for the direct method of reporting the SCF
c. the reconciliation is required to be reported for both the direct and indirect methods of reporting the SCF
d. the reconciliation is an optional schedule
e. the reconciliation reports mainly operating cash flows
Explanation / Answer
ANSWER
The correct option is - the reconciliation is required to be reported for both the direct and indirect methods of reporting the SCF.
The cash flow statement is a financial statement which is used in the business operations including small enterprises. The CFS consists of three sections-
Operating Activities- It includes all the cash received and payments during normal course of business.
Investment Activities- It includes all the investments made by the company.
Financing Activities- It listed information of all the financing activities of the company.