Distinguish Between the Indirect Method and the Direct Method for Reporting

question 122

Essay

Distinguish between the indirect method and the direct method for reporting net cash flows from operating activities.Which method is more common in practice? Which method provides a more logical presentation of cash flows?

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Definitions:

Promissory Statements

Brief declarations or assertions made with the intention of influencing the expectations or actions of others, often found in contracts or agreements.

Predictions

Forecasts or projections about future events or outcomes based on current data, trends, or analysis.

Fraud

Wrongful or criminal deception intended to result in financial or personal gain.

Objective Test

A standard or criteria based on factual measures, independent of personal feelings or opinions, used to assess a person's situation or actions.