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ElenaW [278]
4 years ago
8

The income statement is reconstructed on a cash basis from top to bottom when the ________ method is used to prepare the operati

ng activities section of the statement of cash flows.
Business
1 answer:
Elodia [21]4 years ago
4 0

Answer:

Direct method

Explanation:

There are three types of activities in the cash flow statement under the direct method

1. Operating activities: It records those transactions which are related to the cash receipts and cash payments.

Like:

Cash flow from Operating activities  

Collections from customers

Less: Cash paid to suppliers and employees

Less: Interest and taxes paid

Net Cash flow from Operating activities

2. Investing activities: It records those activities which include purchase and sale of the long term assets

3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance.  

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