To arrive at net cash provided by operating activities, it is necessary to report revenues and expenses on a cash basis. This is done by
a. re-recording all income statement transactions that directly affect cash in a separate cash flow journal.
b. estimating the percentage of income statement transactions that were originally reported on a cash basis and projecting this amount to the entire array of income statement transactions.
c. eliminating the effects of income statement transactions that did not result in a corresponding increase or decrease in cash.
d. eliminating all transactions that have no current or future effect on cash, such as depreciation, from the net income computation.
Answer: C
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Accounting Chapter 23
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