Calculating Cash Flows From Operating Activities - Indirect Method
Indirect Method adjusts to Convert Net Income to Cash Flows from Operating Activities
| Income Statement Item | Effect on Net Income |
|---|---|
| Depreciation Expense | Add to Net Income |
| Amortization Expense | Add to Net Income |
| Depletion Expense | Add to Net Income |
| Losses | Add to Net Income |
| Gains | Deduct from Net Income |
| Add to Net Income | Deduct from Net Income | |
|---|---|---|
| Currents Assets | ||
| Accounts Receivable | Decrease | Increase |
| Inventory | Decrease | Increase |
| Prepaid Expenses | Decrease | Increase |
| Current Liabilities | ||
| Accounts Payable | Increase | Decrease |
| Accrued Liabilities | Increase | Decrease |
| Income Taxes Payable | Increase | Decrease |