Firms typically report cash flows from operations using the indirect method.The indirect method starts with net income, then adds any expense amount that does not use cash, and subtracts any revenue amount that does not provide cash.The adjustments to convert net income to cash flow from operations generally does not involve
A)adding the amount by which an expense exceeds the related cash expenditure for the period.
B)subtracting the amount by which a revenue exceeds the related cash receipt for the period.
C)adding credit changes in operating non-cash working capital accounts.
D)subtracting debit changes in operating working capital accounts.
E)subtracting the amount by which an expense exceeds the related cash expenditure for the period.

Question

Quizplus · Accepted Answer

Subtracting the amount by which an expense exceeds the related cash expenditure for the period is not a typical adjustment in the indirect method. Instead, non-cash expenses like depreciation are added back to net income.

Firms Typically Report Cash Flows from Operations Using the Indirect