What is the first step in calculating cash flows from operations when the indirect method is used?
A)Find net income on 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 first step in the indirect method is to start with net income from the income statement, which is then adjusted for changes in working capital and non-cash expenses to calculate cash flows from operations.

What Is the First Step in Calculating Cash Flows from Operations