In the operating activities section of the statement of cash flows,we start with net income:
A)In the direct method.
B)In the indirect method.
C)In both the direct and the indirect methods.
D)In neither the direct nor the indirect methods.

Question

Quizplus · Accepted Answer

In the indirect method, the operating activities section starts with net income and then makes adjustments to reconcile it to cash flows from operating activities. This is different from the direct method, where cash inflows and outflows are directly reported. Therefore, the correct choice is B.

In the Operating Activities Section of the Statement of Cash