Final answer:
The indirect method is used to calculate cash flow from operations by adjusting net income for deferrals, accruals, noncash, and nonoperating expenses.
Step-by-step explanation:
The method of calculating cash flow from operations that requires the adjustment of net income for deferrals, accruals, noncash, and nonoperating expenses is the indirect method. In contrast, the direct method reports all cash receipts and payments from operating activities directly on the cash flow statement. Companies often prefer the indirect method because it starts with net income and then adjustments are made to convert that figure into cash flow from operating activities.
Cash flow refers in general to payments made into or out of a business, project, or financial product. It can also refer more specifically to a real or virtual movement of money
a cash flow in its narrow sense is a payment (in a currency), especially from one central bank account to another; the term 'cash flow' is mostly used to describe payments that are expected to happen in the future, are thus uncertain and therefore need to be forecast with cash flows;
a cash flow CF is determined by its time t, nominal amount N, currency CCY, and account A; symbolically: CF = CF(t, N, CCY, A).