If a company uses the indirect method to determine cash flows from operating activities,gains:
A)must be added to net income and losses subtracted from net income.
B)and losses must be added to net income.
C)must be subtracted from net income and losses added to net income.
D)and losses must be subtracted from net income.

Question

Quizplus · Accepted Answer

When the indirect method is used,net income is the starting point,and it is converted to cash flows from operating activities by adding back losses and subtracting gains so that these amounts are eliminated.

If a Company Uses the Indirect Method to Determine Cash