In order to determine net cash provided by operating activities, a company must convert net income from an accrual basis to a cash basis under
A)the direct method only.
B)the indirect method only.
C)both the direct method and the indirect method.
D)neither the direct nor the indirect method.

Question

Quizplus · Accepted Answer

Both the direct and indirect methods require converting net income from an accrual basis to a cash basis to determine net cash provided by operating activities. The direct method adjusts each item in the income statement, while the indirect method adjusts net income for changes in balance sheet accounts.

In Order to Determine Net Cash Provided by Operating Activities