Question

Which of the following is true concerning the direct method of calculating operating cash flows? does...

Which of the following is true concerning the direct method of calculating operating cash flows?

does not show how the changes in the elements of a company's operating cycle affected its operating cash flows

reports a company's operating cash inflows separately from its operating cash outflows

does not tie the net income reported on a company's income statement to the net cash provided from operating activities

All of these choices are true concerning the direct method.

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Answer #2

Answer:

Option D: All of the above choices are true

Explanation

There are two methods of preparing cash flow statement.

  • Direct Method;
  • Indirect Method

Direct Method does not tie Net Income to calculate cash flow from operations. Indirect Method does tie the Net Income.

Also, Direct Method reports cash inflows and outflows separately, and it does not show changes in elements of working capital in operating cash flows.

Hence,

Option 'D' is correct and rest all are incorrect.

In case of any doubt or clarification, feel free to come back via comments.

answered by: anonymous
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