When using the indirect method to calculate and report the net cash provided or used by operating activities, income is adjusted for:
A) Gains and losses from nonoperating items.
B) Revenues and expenses that did not provide or use cash.
C) Changes in noncash current assets and current liabilities related to operating activities.
D) Changes in current liabilities related to operating activities.
E) All of these.

Question

Quizplus · Accepted Answer

The indirect method for calculating and reporting net cash provided or used by operating activities involves adjusting net income for items that affected reported net income but did not affect cash. This includes gains and losses from nonoperating items (A), revenues and expenses that did not provide or use cash (B), and changes in noncash current assets and current liabilities related to operating activities (C, D). Therefore, all of these adjustments are part of the process, making E the correct answer.

When Using the Indirect Method to Calculate and Report the Net