Answer (C) is correct . The indirect method begins with net income and then removes the effects of past deferrals of operating cash receipts and payments, accruals of expected future operating cash receipts and payments, and net income items not affecting operating cash flows (e.g., depreciation).
Answer (A) is incorrect because Assets other than cash are not shown on the statement of cash flows.
Answer (B) is incorrect because Depreciation is recorded on the income statement. On the statement of cash flows, depreciation is added back to net income because it was previously deducted on the income statement.
Answer (D) is incorrect because Net carrying amount of assets is reported on the balance sheet, not the statement of cash flows.
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