Why is a private not-for-profit entity more likely to use the direct method of reporting operating activity cash flows than a for-profit business would be? Multiple Choice The direct method is the traditional approach for private not-for-profit entities. An indirect method reconciliation does not have to be included as it does with for-profit entities. The indirect method does not conform as easily with a private not-for-profit entity and its operations. The direct method is likely to show a more positive amount of operating activity cash inflows.

Cash from operating activity is calculated from direct method and indirect methods. In indirect…

Answered: Why is a private not-for-profit entity…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Why is a private not-for-profit entity more likely to use the direct method of reporting operating activity cash flows than a for-profit business would be?

Multiple Choice

The direct method is the traditional approach for private not-for-profit entities.
An indirect method reconciliation does not have to be included as it does with for-profit entities.
The indirect method does not conform as easily with a private not-for-profit entity and its operations.
The direct method is likely to show a more positive amount of operating activity cash inflows.

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