The difference between the indirect and direct methods of presenting the Stateme
ID: 2744415 • Letter: T
Question
The difference between the indirect and direct methods of presenting the Statement of Cash Flows is ________.
the indirect method uses the reconciliation of net income to net cash-flow in place of the operating activity cash-flow section of the direct method
the direct method uses the reconciliation of net income to net cash-flow in place of the operating activity cash-flow section of the indirect method
the Financial Accounting Standards Board (FASB) requires that the indirect method be used in all publicly available financial statements
the Financial Accounting Standards Board (FASB) requires that the direct method be used in all publicly available financial statements
Explanation / Answer
There are two method for the prepration of cash flow statement.
1. Direct Method
2. Indirect Method
The difference between the indirect and direct methods of presenting the Statement of Cash Flows is the indirect method uses the reconciliation of net income to net cash-flow in place of the operating activity cash-flow section of the direct method.
Hence, option (A) is correct answer.