The method of preparing the statement of cash flows that starts with net income and adjusts it for items that affect net income,but do NOT affect cash is called the:
A)net income method.
B)direct method.
C)indirect method.
D)non-cash method.

Question

Quizplus · Accepted Answer

The method of preparing the statement of cash flows that starts with net income and adjusts it for items that affect net income, but do not affect cash is called the indirect method. This method reconciles net income to operating cash flows by adding back non-cash items like depreciation and amortization and adjusting for changes in current assets and liabilities.

The Method of Preparing the Statement of Cash Flows That