Asked by A Breath of Mahek on Apr 28, 2024
Verified
IFRS requires companies to use the direct method of reporting cash flow from operating activities because the direct method provides information not available under the indirect method.
IFRS
Stands for International Financial Reporting Standards, which are a set of accounting rules used by companies to maintain their financial statements globally, fostering transparency and comparability.
Direct Method
A cash flow statement preparation approach that separately lists major classes of gross cash receipts and payments.
Indirect Method
A method used in cash flow statements to adjust net income for changes in non-cash accounts to compute net cash from operating activities.
- Recognize the disparity between direct and indirect strategies in documenting cash flows from operating activities.
- Distinguish between the accounting treatments and financial reporting under US GAAP and IFRS, especially regarding cash flow reporting.
Verified Answer
Learning Objectives
- Recognize the disparity between direct and indirect strategies in documenting cash flows from operating activities.
- Distinguish between the accounting treatments and financial reporting under US GAAP and IFRS, especially regarding cash flow reporting.
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