In which financial statement is the difference between accrual-basis net income and cash-basis net income detailed for investors and creditors ? A) Statement of Cash Flows B) Balance Sheet C) Income Statement D) Statement of Stockholders’ Equity E) Statement of Cash-Basis Net Income Solution Answer: Statement of Cash Flows The indirect method of cash flow presentation, net income (as reported in the income statement) as the starting point in the computation of net cash flows from operating activities. Adjustments to net income necessary to arrive at net cash flows from operating activities fall into three categories: noncash expenses, timing differences, and nonoperating gains and losses. Adjustments reconcile net income (accrual basis) to net cash flows from operating activities. .