Which method involves listing cash flows from operating activities as cash receipts and cash payments?

The correct answer is the direct method. This technique is used to present cash flows from operating activities by explicitly detailing the cash inflows and outflows during a specific period. Under this method, cash receipts from customers, cash payments to suppliers, cash payments for operating expenses, and other cash transactions are reported directly. This allows users of the financial statements to see exactly how much cash was generated and used in the operational functioning of the business.

The direct method contrasts with the indirect method, which starts with net income and adjusts for changes in balance sheet accounts and non-cash transactions to derive cash flows from operations. This latter method does not present cash receipts and payments in their raw form, making the direct method preferable for some users who want clearer insight into the actual cash generated or consumed by ongoing operations.