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Cash flow from operating activities

Which method do you prefer in determining net cash flow from operating activities, the direct method or the indirect method? Explain.

Solution Preview

Both methods have their advantages -
Indirect method - This provides a reconciliation of the net income and the operating cash flows and so shows how the net income under the accrual method is related to cash flows from operating activities

Direct method - This method lists the cash inflows and outflows related to ...

Solution Summary

The solution explains which method should be preferred in preparing the cash flow from operating activities section

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