Reconciliation of Operating Income to Net Cash Flow From Operating Activities

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A reconciliation of operating income to net cash provided from operating activities is required as part of the cash flows statement. The reconciliation should separately report all major classes of reconciling items.

Major classes of reconciling items include:

• Depreciation
• Provision for uncollectible accounts
• Classification differences between the operating statement and the statement of cash flows
• (Increase)/Decrease in non-cash current assets
• Increase/(Decrease) in current liabilities

At a minimum, the agency should disclose changes in receivables pertaining to operating activities, inventories, and in payables related to operating activities.

These represent only some of the major classes of reconciling items. The agency can provide additional detail if they desire.

Chart of accounts for the reconciliation section

Cash Flow Structure Quiz

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