Which sequence correctly describes preparing a simple cash flow statement from a monthly forecast?

• A. Start with net income, adjust non-cash items, adjust for changes in working capital, add/subtract financing/investing cash.
• B. Begin with ending cash balance and work backward to forecast cash flows.
• C. Start with depreciation and amortization, then add capital expenditures, then adjust for changes in working capital.
• D. Forecast cash receipts and payments directly without income statement adjustments.

Answer: (A)