Question

Since the Direct Method is much easier to understand why do you think that more companies...

Since the Direct Method is much easier to understand why do you think that more companies use the Indirect Method to prepare the Operating Activities section of the Cash Flow Statement?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Why is the Statement of Cash Flows so important? Why do outside parties rely on it...
Why is the Statement of Cash Flows so important? Why do outside parties rely on it so much? On the cash flow statement cash inflows are shown as __________ while cash outflows are shown as _________. What do you need to prepare a cash flow statement? Describe the three cash flow categories, give the general account rule for what types of accounts go in each category, and provide example line items for both cash inflows and cash outflows. Operating Activities...
Direct or indirect? Most companies report operating cash flows using the ___________ method. Net income is...
Direct or indirect? Most companies report operating cash flows using the ___________ method. Net income is reconstructed on a cash basis when the ___________ method is used to report the net cash flows provided (used) by operating activities. The net cash amount provided by operating activities using the direct method is ____________ that computed using the indirect methods. The FASB recommends that the operating activities section of the statement of cash flows be reported using the ____________ method.
One of the key differences between direct and indirect method is the the type of transactions...
One of the key differences between direct and indirect method is the the type of transactions used. The indirect method uses net income as the base and converts the income into cash flow through the use of adjustments. The direct method only takes the cash transactions into account and produces the cash flow from operations. Another difference is that indirect method makes sure to convert the net income in terms of cash flow automatically. Cash flow direct method, on the...
1/ Both the direct method and the indirect method of computing net cash flow from operating...
1/ Both the direct method and the indirect method of computing net cash flow from operating activities convert accrual-based income statement amounts into cash flows. TRUE/ FALSE 2/ Under the indirect method, when machinery is sold at a gain, the gain is added in the operating section of the statement of cash flows and the cost is added in the investing section. TRUE/FALSE 3/ All of the following are financing activities except: Multiple Choice * 

Selling capital stock.
 * 

Lending...
The only part that differs in a statement of cash flows using the direct method rather...
The only part that differs in a statement of cash flows using the direct method rather than the indirect method is the: Question options: investing activities section. operating activities section. financing activities section. none of the above.
For the operating activities section of the statement of cash flow you can either use the...
For the operating activities section of the statement of cash flow you can either use the direct method or the indirect method, please state in detail one difference between the two methods.
The opening and closing balances are the same regardless of which method you are using. The...
The opening and closing balances are the same regardless of which method you are using. The cash flow statement is prepared after the books have been closed. If there are erroneous postings, then the closing balances will be affected as well, not just individual line items that impact cash. Also, think of the journal entry method used in the direct method in this text. Aren't we using ending ledger balances to determine cash flows? For example, if Sales =$500, and...
Consider the following: Argument #1: The indirect method presents a firm’s operating cash receipts and payments...
Consider the following: Argument #1: The indirect method presents a firm’s operating cash receipts and payments and is thus more consistent with the objectives of the cash flow statement. Argument #2: The indirect method provides more information than the direct method and is more useful to analysts in estimating future operating cash flows. Which of these arguments support the use of the indirect method for presenting cash flow from operating activities in the cash flow statement? A. Argument #2 only....
Cash Flows from Operating Activities—Indirect Method The net income reported on the income statement for the...
Cash Flows from Operating Activities—Indirect Method The net income reported on the income statement for the current year was $202,100. Depreciation recorded on equipment and a building amounted to $60,400 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $51,330 $54,410 Accounts receivable (net) 65,090 67,140 Inventories 128,330 115,680 Prepaid expenses 7,130 7,670 Accounts payable (merchandise creditors) 57,340 60,720...
1) Which of the following is a method for reporting cash flows from operating activities that...
1) Which of the following is a method for reporting cash flows from operating activities that begins with net income and reconciles to cash flows from operating​ activities? A.accrual method B.direct method C.indirect method D.cashminus−basis method 2) Under the indirect method of preparing a statement of cash​ flows, cash disbursed for the acquisition of a capital asset​ is: A.added in the financing activities section B.added in the investing activities section C.subtracted in the operating activities section D.subtracted in the investing...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT