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The Main Disadvantage of the Direct Method of Reporting Cash

question 97

True/False

The main disadvantage of the direct method of reporting cash flows from operating activities is that the necessary data are often costly to accumulate.


Definitions:

Negotiable Instruments

Financial documents that guarantee the payment of a specific amount of money, either on-demand or at a set time, with examples including checks, promissory notes, and drafts.

IOU

An informal written document that acknowledges a debt owed.

Handwritten

Refers to text that has been written by hand, as opposed to being printed or digitally produced.

Negotiable Instrument

An official paper that obligates the payment of a fixed money amount, which can be demanded at any time or paid at a specific interval, with the document listing the responsible payer's name.

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