The indirect method of preparing the Cash Flow Statement basically adjusts the net income to reflect what the financials would have looked like if cash basis was used instead of accrual basis.
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Question & Answer: The indirect method of preparing the Cash Flow Statement basically adjusts the net inco…..
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While preparing statement of cash flows using the Indirect method, the net income is adjusted with the non-operating income and expenses and also with the changes in working capital to arrive at the the cash income or expense.