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Under which method of preparing a statement of cash flows will a reconciliation between net income and cash from operating activities be shown on a separate schedule?

User Cardmagik
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Final answer:

Under the Indirect method of preparing a statement of cash flows, the reconciliation between net income and cash from operating activities is shown on a separate schedule called the reconciliation of net income to net cash provided/used by operating activities.

Step-by-step explanation:

Under the **Indirect method** of preparing a statement of cash flows, the reconciliation between net income and cash from operating activities is shown on a separate schedule called the **reconciliation of net income to net cash provided/used by operating activities**.

This schedule starts with net income and then adjusts for non-cash expenses and gains/losses, changes in working capital accounts, and other non-operating items to arrive at the cash provided/used by operating activities. It allows users of the financial statements to understand the differences between net income and cash from operating activities.

For example, if a company reports significant depreciation expense in its income statement, this expense is added back to net income in the reconciliation schedule because it is a non-cash expense that does not affect the cash flow from operations.

User Stealthwang
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