Asked by Diana Olvera on May 31, 2024
Verified
The direct method of preparing the statement of cash flows will show the same increase or decrease in cash as the indirect method.
Direct Method
A costing approach where only direct costs are charged to a cost object, typically excluding overhead or indirect costs.
Net Cash Provided
The amount of cash generated by a company's operations after accounting for expenditures and receipts.
Indirect Method
A way of preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to obtain net cash flow from operating activities.
- Learn about the breakdown and sorting of cash flows across operating, investing, and financing activities.
- Discern between the use of direct versus indirect methods in the creation of cash flow statements from operating activities.
Verified Answer
Learning Objectives
- Learn about the breakdown and sorting of cash flows across operating, investing, and financing activities.
- Discern between the use of direct versus indirect methods in the creation of cash flow statements from operating activities.
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