If the calculation of net cash flows from operating activities starts with net income, the company:
A) is using the net income method.
B) will remove the effects of all noncash items included in the calculation of net income.
C) is using the direct method.
D) will add all noncash items not included in the calculation of net income.

Question

Quizplus · Accepted Answer

The company is using the indirect method, which starts with net income and adjusts for noncash items and changes in working capital to calculate net cash flows from operating activities.

If the Calculation of Net Cash Flows from Operating Activities