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The information to prepare the statement of cash flows comes from all of the following sources except: a
The information to prepare the statement of cash flows comes from all of the following sources except:
a. comparative balance sheets.
b. additional transaction data about cash provided or used during the period.
c. adjusted trial balance.
d. current income statement.
Expert Solution
The correct answer to the given question is option c. adjusted trial balance.
Under the indirect method of preparing cash flow statement, the information available on the income statement and the balance sheet is used. Under this method, adjustments related to change in net working capital and depreciation expense are usually made to the net income.
Under the direct method of preparing cash flow statement, the transaction data about cash paid or received during the period is used.
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