Introduction: Operating Activities is the most important section of the Statement of
Operating Activities can be reported using any of the following methods:
1. Indirect Method: It starts from Net Income and adjusts it to arrive at net cash provided by operating activities.
2. Direct Method: It shows directly the cash receipts and payments from operations of the business. Some T-accounts are prepared in this method to arrive at the cash flows.
To State:
1. Summary
2. Statement of Cash Flows (Direct Method).
3. Reconciliation to the Indirect Method for Net Cash provided by Operating Activities.
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Loose Leaf for Fundamental Accounting Principles
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