Which of the Following Statements Regarding the Direct and Indirect

question 95

Multiple Choice

Which of the following statements regarding the direct and indirect methods of reporting cash flow from operating activities is false?

• A)Although both methods result in the same net increase or decrease in cash for the year,net cash flow from operating activities will be different under the two methods.
• B)The direct method shows the specific cash inflows and outflows constituting the operating activities of the business.
• C)Under the indirect method,the computation of net cash flow from operating activities begins with net income as shown in the income statement.
• D)The FASB permits both the direct and the indirect methods,but has expressed a preference for the direct method.