Question

The method used to compute net cash provided by operating activities that adjusts net income for items that affected reported net income but did not affect cash is known as

the:
A. Indirect method.
B. Direct method.
C. Adjustment method.
D. Income statement method.

Answer 1

The method used to compute net cash provided by operating activities that adjusts net income for items that affected reported net income but did not affect cash is known as the Indirect method.

Step-by-step explanation:

The method used to compute net cash provided by operating activities that adjusts net income for items that affected reported net income but did not affect cash is known as the Indirect method. The Indirect method starts with net income and makes adjustments to arrive at the net cash provided by operating activities. It takes into account items such as depreciation, changes in working capital, and non-cash expenses.