Response to the following problem:
You Decide: Which method is better at reporting information on the statement of cash flows-the indirect or direct method?
Your finance professor said that the indirect method is a better way to prepare the statement of cash flows because it starts with a known number-net income. However, in your accounting course, your professor teaches that the direct method gives you more information on how the cash is used and, therefore, contains more useful information. Which professor do you agree with?