Determining net cash flows from operating activities using the indirect method reveals changes in the accounts receivable account.

Question

Quizplus · Accepted Answer

The indirect method of determining net cash flows from operating activities involves adjusting net income by changes in non-cash items, such as accounts receivable. An increase in accounts receivable would indicate that less cash was received from customers during the period, while a decrease would indicate that more cash was received. Therefore, changes in the accounts receivable account are important in determining net cash flows from operating activities using the indirect method.

Determining Net Cash Flows from Operating Activities Using the Indirect