Which Format Is Favored by Companies for the Operating Activities

question 37

Multiple Choice

Which format is favored by companies for the operating activities section of the Statement of Cash Flows, and why?

• A)The indirect method is used more often because it allows the user to more easily visualize the connection between the financial statements.
• B)The indirect method is used more often because it allows for a restatement of each accrual based item to a cash basis.
• C)The direct method is used more often because it allows the user to more easily visualize the connection between the financial statements.
• D)The direct method is used more often because it allows for a restatement of each accrual based item to a cash basis.

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