Question: The indirect method for calculating operating cash flows computes cash flows by: a. adjusting each line of an income statement. b. adjusting an income statement

income statement for changes only in current liabilities. c. adjusting net income

The indirect method for calculating operating cash flows computes cash flows by: a. adjusting each line of an income statement. b. adjusting an income statement for changes only in current liabilities. c. adjusting net income for items that affect cash flows. d. adjusting net income for items that do not affect cash flows. in the direct method of cash flow computation, each item on an accrual income statement is adjusted to reflect: a. operating cash flows. b. financing cash flows. c. nonrecurring cash flows. d. investing cash flows. Consider the following information for Rhombus Company: Cash receipts from customers Cash paid to suppliers Cash paid to employees Gain on sale of equipment Depreciation for the year Income tax paid $452,000 230,000 114,000 51,000 20,000 79,000 Calculate cash from operating activities using the direct method. a. $57,000 b. $80,000 c. $29,000 d. $37,000

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