Final answer:
The indirect method is used for reporting cash flows from operating activities by starting with net income and adjusting for non-cash items and changes in working capital to reconcile to cash generated by operating activities.
Step-by-step explanation:
The method for reporting cash flows from operating activities that starts with net income and reconciles it to cash flows from operating activities is known as the indirect method. In using the indirect method, a company's net income is adjusted for items that affected reported net income but did not result in actual cash inflows or outflows. These adjustments include changes in working capital accounts, depreciation, amortization, and other non-cash expenses. By making these adjustments, the indirect method reconciles net income to the cash amount generated or used by operating activities.
On the other hand, the direct method involves reporting all cash receipts and cash payments from operating activities directly, thus showing the cash inflows and outflows as they occur. The accrual method and cash-basis method are different accounting methods for recording revenues and expenses but are not directly related to the presentation of cash flows from operating activities in the context of the cash flow statement.