Answer (D) is correct . The statement of cash flows may report cash flows from operating activities in either an indirect (reconciliation) or a direct format. The direct format reports the major classes of operating cash receipts and cash payments as gross amounts. The indirect presentation reconciles net income to the same amount of net cash flow from operations that would be determined in accordance with the direct method. To arrive at net operating cash flow, the indirect method adjusts net income by removing the effects of (1) all deferrals of past operating cash receipts and payments, (2) all accruals of expected future operating cash receipts and payments, (3) all financing and investing activities, and (4) all noncash operating transactions.
Answer (A) is incorrect because Only the direct method format for the statement of cash flows presents cash collected from customers as a gross amount.
Answer (B) is incorrect because Only the direct method format for the statement of cash flows presents cash collected from customers as a gross amount.
Answer (C) is incorrect because Only the direct method format for the statement of cash flows presents cash collected from customers as a gross amount.
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