When a Company Uses the Direct Method to Determine the Cash

Multiple Choice

When a company uses the direct method to determine the cash flows from operating activities, cash flows from operating activities will:

A) be identical to the amount reported using the indirect method.
B) be larger if there is a net cash inflow and smaller if there is a net cash outflow compared to the amount reported using the indirect method.
C) always be larger than the amount reported using the indirect method.
D) be larger if there is a net cash outflow and smaller if there is a net cash inflow compared to the amount reported using the indirect methoD.
The direct method and the indirect method produce the same result for net cash provided by or used in operating activities.