The indirect method of computing cash flows from operating activities begins with net income and reconciles net income to operating cash flows.

Question

Quizplus · Accepted Answer

The indirect method for computing cash flows from operating activities does indeed start with net income and then reconciles it to operating cash flows by adding and subtracting various non-cash and cash items, such as depreciation, changes in accounts receivable and accounts payable, and other adjustments.

The Indirect Method of Computing Cash Flows from Operating Activities