The Indirect Method The following points explain and illustrate the indirect method. a. In order to determine net cash provided from operating activities it is necessary to report revenues and expenses on a Cash Basis This is determined by adjusting net income for items that did not affect cash. b. The operating section of the statement of cash flows should begin with add (or deduct) items not affecting cash, and show net cash provided by operating activities. In determining net cash provided by operating activities, C. from net in specific current assets other than cash are are added to net income. income, and d. in specific current liabilities are added to net income, and are deducted from net income. e. and a Expenses for and disposal of plant assets are added back to net income, and a plant assets is from net income. on on disposal of