A cash flow statement for an entity calculates the cash flow from operations by starting with net income and then makes a series of adjustments to it.What method of calculating cash flow from operations are they using?

Question

Quizplus · Accepted Answer

The entity is using the indirect method of calculating cash flow from operations, which starts with net income and makes adjustments for non-cash expenses, changes in working capital, and other operating activities. The direct method would involve calculating cash inflows and outflows from operating activities, while the net income method and cash equivalents method are not recognized methods of calculating cash flow from operations.

A Cash Flow Statement for an Entity Calculates the Cash