Exam IIA-CIA-Part3 Topic 8 Question 284 Discussion

Net cash flow from used by operating activities may be reported indirectly by removing from profit or loss the effects of1) deferrals of past operating cash flows,2) accruals of expected future operating cash flows.3) income or expense items related to financing and investing cash flows, and4) noncash transactions. These adjustments include such items as depreciation, amortization of patents, amortization of bond discount and bond premium gains and losses. changes during the period in trade receivables, changes in inventory, and changes in accounts payable and accrued liabilities. In the reconciliation of profit or loss to net cash from used by) operations, depreciation a noncash expense) is added to profit or loss.