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Explain difference between the direct and indirect method

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Reference no: EM132526294

Your accounting department has provided your team with the statement of cash flows prepared using the indirect method. At your first meeting, some of the managers have expressed concerns about the statement's understandability and do not view the statement as anything other than a "rearranged income statement". The managers have requested that your team explain to them how the statement is constructed.

Question 1: Explain the difference between the direct and indirect method. Also, explain to your managers why the indirect method is a useful approach to reporting cash flows from operating activities.

Reference no: EM132526294

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