Under the indirect method, the net cash flow from operating activities is computed by adjusting net income to remove the effect of all deferrals of past operating cash receipts and payments, and all accruals of future operating cash receipts or payments.

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Quizplus · Accepted Answer

This is a correct statement regarding the indirect method of computing net cash flow from operating activities. The indirect method starts with net income from the income statement and then makes adjustments for non-cash items such as depreciation, changes in current assets and liabilities, and other deferrals and accruals to arrive at the net cash flow from operating activities.

Under the Indirect Method, the Net Cash Flow from Operating