Interactive accounting lab
Operating Cash Flows: Indirect Method
Begin with accrual-basis net income. Then remove noncash items and reconcile changes in working capital to calculate cash from operating activities.
Operating activities
Build the reconciliation
Green adds cash; red reduces cash.
Net cash from operating activities
Indirect-method reconciliationAmount
Net incomeAccrual-basis starting point
Add: Depreciation expenseNoncash expense: it lowered income but not current cash.
Net cash from operating activities