When a Company Uses the Direct Method to Determine the Net

question 42

Multiple Choice

When a company uses the direct method to determine the net cash flows from operating activities, cash flows from operating activities will:

• A) be identical to the amount reported using the indirect method.
• B) be larger if there is a net cash inflow and smaller if there is a net cash outflow compared to the amount reported using the indirect method.
• C) always be larger than the amount reported using the indirect method.
• D) be larger if there is a net cash outflow and smaller if there is a net cash inflow co mpared to the amount reported using the indirect method.

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