In preparing a statement of cash flows, cash flows from operating activities
A)are always equal to accrual accounting income.
B)are calculated as the difference between revenues and expenses.
C)can be calculated by appropriately adding to or deducting from net income those items in the income statement that do not affect cash.
D)can be calculated by appropriately adding to or deducting from net income those items

Question

Quizplus · Accepted Answer

Cash flows from operating activities are calculated by adjusting net income for non-cash items such as depreciation, amortization, changes in accounts receivable, accounts payable, and inventory. These adjustments allow for a better understanding of the underlying cash flows generated by the operations of the company.

In Preparing a Statement of Cash Flows, Cash Flows from Operating