Author Question: Control efficiency addresses whether control goals are being achieved. Indicate whether the ... (Read 113 times)

sabina · **on:** Jul 5, 2018

Control efficiency addresses whether control goals are being achieved.
Indicate whether the statement is true or false

Question 2

Explain how the operating activities section of the statement of cash flows is prepared using the indirect method.

What will be an ideal response?

jliusyl · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

F

Answer to Question 2

The indirect method for the statement of cash flows involves the conversion of accrual-based income from operations to cash-based operating income. The first step is to add all noncash items, such as depreciation, to net income. The next step is to adjust net income for every change in each current asset and each current liability. For example, a net decrease in accounts receivable would result in an addition to net income. The totals of the additions and subtractions to net income will result in the net increase or decrease in cash from operating activities.