Preparing the statement of cash flows using the indirect method starts with net income and converts it to cash flows provided by operating activities.

Question

Quizplus · Accepted Answer

This statement is correct. The indirect method of preparing the statement of cash flows begins with net income and adjusts for non-cash items, changes in working capital accounts, and other operating activities to derive cash flows provided by operating activities.

Preparing the Statement of Cash Flows Using the Indirect Method