What are the major advantages of the indirect method of reporting cash flows from operating activities?

Question

David · Accepted Answer

There are two methods of preparing cash flows viz. Direct method and Indirect method.  Many 
firms choose the indirect method of preparing cash flow statement for determining the cash flow 
from operations. The indirect method provides reconciliation between net income and the cash 
flow from operating activities as it computes the cash flow by identifying non-cash transactions 
such as depreciation, amortization, provisions, etc.

What are the major advantages of the indirect method of reporting cash flows from operating activities?

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment