What is the starting point for calculating cash flows from operations when the indirect method is used?
A)Net income from the income statement.
B)Calculate the net change in the cash account.
C)Add the change in accounts receivable to sales revenue.
D)Identify the balance sheet accounts that relate to operating activities.

Question

Quizplus · Accepted Answer

The indirect method starts with net income from the income statement and adjusts it by eliminating the effects of items that do not involve cash (for example,depreciation)and including items that do have cash effects.

What Is the Starting Point for Calculating Cash Flows from Operations