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The reporting of net cash provided or used by operating activities that lists the major items of operating cash receipts,such as receipts from customers,and subtracts the major items of operating cash disbursements,such as cash paid for merchandise,is referred to as the:
A) Direct method of reporting net cash provided or used by operating activities.
B) Cash basis of accounting.
C) Classified statement of cash flows.
D) Indirect method of reporting net cash provided or used by operating activities.
E) Net method of reporting cash flows from operating activities.
Direct Method
In cash flow reporting, a method that shows the specific sources and uses of cash, categorizing cash flows into operating, investing, and financing activities.
Net Cash Provided
The amount of cash generated by a company’s operations after accounting for all cash inflows and outflows.
Operating Activities
Activities that relate directly to the production, sale, and delivery of a company's products or services, affecting the net income.
- Understand the distinctions between the direct and indirect approaches in preparing the operating activities segment of the cash flow statement.
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Learning Objectives
- Understand the distinctions between the direct and indirect approaches in preparing the operating activities segment of the cash flow statement.
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