the direct method of presenting net cash flow from operating activities: a.must be used in a statement of cash flows b.is used when there are no cash flows from investing and financing activities c.shows the major categories of operating cash receipts and cash payments d.reconciles accrual basis net income to a cash basis amount

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21-11-2022
Business

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the direct method of presenting net cash flow from operating activities: a.must be used in a statement of cash flows b.is used when there are no cash flows from investing and financing activities c.shows the major categories of operating cash receipts and cash payments d.reconciles accrual basis net income to a cash basis amount

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ujjwalmishra1 ujjwalmishra1 · Answer 1 · 2022-11-29T11:23:02+01:00

The direct method of presenting net cash flow from operating activities must be used in a statement of cash flows. Hence option a is correct.

What is net cash flow?

Net cash flow is defined as a profitability indicator that shows how much money a company makes or loses over a specific time frame. A company is said to have positive cash flow if, after paying all of its operational expenses, it still has cash left over.

One of two accounting treatments that are used to produce a cash flow statement is the direct approach. The statement of cash flows direct method does not convert the operational section from accrual accounting to a cash basis; rather, it uses real cash inflows and outflows from the company's activities.

Thus, the direct method of presenting net cash flow from operating activities must be used in a statement of cash flows. Hence option a is correct.

To learn more about net cash flow, refer to the link below:

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