The indirect method adjusts profit or loss for the effects of:
A) changes in inventories,
B) changes in operating receivables and payables
C) noncash items such as depreciation
D) deferred taxes
E) all of the above

Question

Quizplus · Accepted Answer

The indirect method of preparing a cash flow statement starts with net income and adjusts for changes in balance sheet accounts to arrive at cash provided by operating activities. This includes adjustments for non-cash items (like depreciation), changes in inventories, operating receivables and payables, and deferred taxes, among others.

The Indirect Method Adjusts Profit or Loss for the Effects