The first line item in the operating activities section of a spreadsheet for a statement of cash flows prepared using the indirect method is:
A)Cash.
B)Cash received from customers.
C)Increase (decrease)in accounts receivable.
D)Net income.
E)Adjustments to net income.

Question

Quizplus · Accepted Answer

The first line item in the operating activities section of a statement of cash flows prepared using the indirect method is net income. This is because the indirect method starts with net income and then adjusts for non-cash transactions and changes in working capital accounts to arrive at the cash flow from operating activities.

The First Line Item in the Operating Activities Section of a Spreadsheet