The method that begins with net income or net loss and adjusts that number for items that did not affect cash is called the

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The method that begins with net income or net loss and adjusts that number for items that did not affect cash is called the indirect method. This method reconciles the differences between net income and net cash provided by operating activities by adjusting for non-cash items such as depreciation and changes in current assets and liabilities. The direct method starts with cash receipts and cash disbursements, while the operating method and cash-equivalent method are not commonly used terms in accounting.

The Method That Begins with Net Income or Net Loss