Asked by Jadyn Quinn on May 05, 2024
Verified
Using the indirect method, the operating activities section of the cash flow statement is constructed starting with net income and adjusting it to a cash basis.
Indirect Method
A method used in cash flow statement preparation that adjusts net income for changes in balance sheet accounts to calculate operating cash flow.
Net Income
The total profit or loss of a company after all revenues, expenses, taxes, and costs have been subtracted.
- Analyze figures from the income statement and understand their influence on the performance of a business.
- Determine and examine the cash movements associated with operational, investment, and financing tasks.
Verified Answer
MB
Macjeck BoakyeiMay 10, 2024
Final Answer :
True
Explanation :
The indirect method of constructing the operating activities section of the cash flow statement begins with net income and then makes adjustments to it to arrive at a cash basis.
Learning Objectives
- Analyze figures from the income statement and understand their influence on the performance of a business.
- Determine and examine the cash movements associated with operational, investment, and financing tasks.