Asked by David Chang on Jul 17, 2024
Verified
Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the
A) direct method.
B) indirect method.
C) working capital method.
D) cost-benefit method.
Indirect Method
A way of calculating cash flows from operating activities in the statement of cash flows by adjusting net income for changes in balance sheet items.
Net Income
The total profit of a company after all revenues, gains, expenses, and losses have been accounted for, typically within a specific period of time.
Working Capital Method
A financial metric used to evaluate a company's operational efficiency, calculated as current assets minus current liabilities.
- Comprehend the direct and indirect approaches to determining cash flows from operating activities.
Verified Answer
Learning Objectives
- Comprehend the direct and indirect approaches to determining cash flows from operating activities.
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