The indirect method for the preparation of the operating activities section of the statement of cash flows:
A) Separately lists each major item of operating cash receipts.
B) Separately lists each major item of operating cash payments.
C) Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
D) Separately lists each major item of operating cash receipts and payments.
E) All of these answers are correct.

Question

Quizplus · Accepted Answer

The indirect method for preparing the operating activities section of the statement of cash flows starts with net income and then makes adjustments for items such as depreciation, changes in current assets and liabilities, and noncash expenses or revenues. It does not separately list each major item of cash receipts and payments.

The Indirect Method for the Preparation of the Operating Activities