What is the principal disadvantage of the direct method of reporting cash flows from operating activities?

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Financial And Managerial Accounting

ISBN: 9781337119207

14th Edition

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

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Question Posted: Dec 11, 2011 04:59 AM

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The indirect method for reporting cash flows from operating activities can create an erroneous impression about noncash expenses (such as depreciation). What is the impression and why is it erroneous?
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What is the principal disadvantage of the direct method of reporting cash flows from operating activities?

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