Assume That a Company Chooses the Indirect Method to Determine

question 157

Essay

Assume that a company chooses the indirect method to determine net cash flows from operating activities.
Required:
Part a.Explain why net income is the starting point when the indirect method is used to determine cash flows from operating activities.
Part b.Briefly explain why a company's net income is most likely different in amount than its cash flows from operating activities.

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