The indirect method of reporting cash flows calculates operating cash flow by which of the following methods?

Start with net income for the period, adjust for all noncash expenses/revenues, adjust for nonoperating items included in net income and then adjust for changes in the balance of operating asset and liability accounts.

Start with net income for the period and adjust for all noncash expenses/revenues and adjust for nonoperating items included in net income.

Start with cash collections for the period and deduct cash outflows incurred in collecting this cash, and then adjust for changes in the balance of operating asset and liability accounts.