Question
All of the following are true regarding the comparison of the direct versus indirect method of operating cash flows, with the exception of which statement?
All of the following are true regarding the comparison of the direct versus indirect method of operating cash flows, with the exception of which statement?
Use of the direct or indirect methods will result in the same operating cash flow total for a company.
Reported investing and financing cash flows will be the same under the direct and indirect methods.
The direct method is a reconciliation of net income to operating cash flows, while the indirect method is not a reconciliation.
The starting point for the direct method is sales revenue (i.e., cash collections from customers), while the indirect method begins with net income.
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