The starting point for preparing the operating activities section using the indirect method is:
A)current assets.
B)current liabilities.
C)net income.
D)ending cash balance.

Question

Quizplus · Accepted Answer

When preparing a schedule to determine operating cash flows using the indirect method,start with net income as reported on the last line of the company's income statement.By starting with net income,it's as if we are assuming all revenues resulted in cash inflows and all expenses resulted in cash outflows.But we know this is not true,however,so we adjust net income to eliminate items that are included in net income but do not involve cash and to include items that were excluded from net income but do involve cash.

The Starting Point for Preparing the Operating Activities Section Using