Two methods are available to prepare the operating activities section of a statement of cash...
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Two methods are available to prepare the operating activities section of a statement of cash flows. Which of the following statements regarding these two methods is false? Question options: If a company uses the indirect method, it must separately disclose the cash payments made for interest and income taxes. If a company uses the direct method, it must present a separate schedule which reconciles net income to net cash from operating activities. Advocates of the direct method believe that the indirect method reveals too much by telling readers gross amounts of cash receipts and cash payments from operations. The FASB prefers the direct method, while most companies use the indirect method in practice.
Two methods are available to prepare the operating activities section of a statement of cash flows. Which of the following statements regarding these two methods is false?
Question options:
If a company uses the indirect method, it must separately disclose the cash payments made for interest and income taxes.
If a company uses the direct method, it must present a separate schedule which reconciles net income to net cash from operating activities.
Advocates of the direct method believe that the indirect method reveals too much by telling readers gross amounts of cash receipts and cash payments from operations.
The FASB prefers the direct method, while most companies use the indirect method in practice.
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