Next Page Previous Page Note It is recommended that you save

Next Page Previous Page Note: It is recommended that you save your response as you complete each question. D Question 3 (Mandatory) (4 points) The direct method of presenting net cash flow from operating activities: Must be used in a statement of cash flows Is used when there are no cash flows from investing and financing activ Reconcles accrual basis Shows the major categories of operating cash receipts and cash payments net income to a cash basis amount , p MacBook Air fy

Solution

Answer.

Reconciles the Accrual basis net income to a cash basis amount.

In Direct method we consider Amount received from sales , amount paid for purchase of raw materials and cash paid for operating expenses. But in Indirect method we follow accruel method i.e by using net income, working capital and non cash transactions in income statement ( Depreciation, Profit/loss on sale of asset etc.)