Question

The direct method for preparing and reporting the statement of cash flows reports net income and then adjusts it for items necessary to calculate net cash provided or used by operating activities.

Answer 1

Answer: False

Explanation: The method described in the given statement is indirect method of preparing operating activities section in a cash flow statement.

In case of direct method, the actual cash transactions involving inflow and outflow of cash is recorded to compute operating activities.

Thus, we can conclude that the given statement is false.