Asked by Margot Rochester on Jun 04, 2024
Verified
The indirect method for computing and reporting net cash flows from operating activities involves adjusting the net income figure to obtain net cash provided or used by operating activities.
Indirect Method
A way of preparing the cash flow statement where net income is adjusted for non-cash transactions and changes in working capital to find net cash provided by operating activities.
Net Cash Flows
The difference between a company's cash inflows and outflows within a specific period.
- Understand the distinctions between the direct and indirect approaches in reporting cash flows from operating activities.
Verified Answer
MC
Martin CooperJun 09, 2024
Final Answer :
True
Explanation :
This statement is true. The indirect method starts with net income and then makes adjustments for non-cash expenses and changes in current assets and liabilities to arrive at the net cash provided (or used) by operating activities.
Learning Objectives
- Understand the distinctions between the direct and indirect approaches in reporting cash flows from operating activities.
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