Prepare the Operating Activities Section of a Statement of Cash

Prepare the operating activities section of a statement of cash flows using one of two approaches: (a) the indirect method or (b) the direct method.
(a)the indirect method or
(b)the direct method.The first step in the preparation of a statement of cash flows is to determine the net cash provided (used) by operating activities using either the indirect or direct method (preferred).In the indirect method, we convert profit from an accrual basis to a cash basis.In the direct method, we convert each individual revenue and expense account from an accrual basis to a cash basis.