Question:
Which of the following is disclosed separately in a statement of cash flows using the indirect method?
a. Increase in retained earnings for the period
b. Cash received from customers
c. Net income
d. Cash paid to employees and other supplies
Cash Flow Statement:
The cash flow from operating activities could be prepared under the direct method or the indirect method. The indirect method uses the balance sheet approach for cash flow computation. The net income could be determined through the retained earning statement for cash flow statement preparation.
Answer and Explanation:1
The correct answer is option (a).
An increase in retained earnings for the period is disclosed separately in a statement of cash flows using the indirect method.
Explanation: An increase in retained earnings for the period is disclosed separately in a statement of cash flows using the indirect method for the computation of the net income to be reported in the cash flow statements.
