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Following are methods:
1 - direct method
2 - indirect method
Wiki User
∙ 9y ago
Wiki User
∙ 9y agoFollowing are two methods of preparing cash flow statement:
1 - Direct method
2 - Indirect Method
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How can we treat taxation while preparing cash flow statements?
if tax is paid then it will be shown in cash flow statement otherwise it will not shown in cash flow statement.
Does the choice of cost flow method affect the statement of cash flows?
no only the method of preparing the cash flow statement can not change the actual cash flow it is just the preference of preparation.
In Cash flow statement what is direct method and indirect method?
Direct and indirect method of preparing cash flow statement is same with only one difference which is under indirect method 'Cash flow from operating activities' is prepared by adjusting the net profit amount for non cash items while 'Cash flow from financing activities' and 'Cash flow from investing activities' is prepared in same manner in both methods.
How do you calculate accruals and non-cash transactions in preparing statement of cash flows?
non cash transaction are adjusted while preparing for cash flow using indirect method.
Does using the direct method of preparing a cash flow statement provide a higher cash flow result than the indirect method?
Actual cash flow remains the same no matter what method is used it is just the presentation of statement and method of calculated cash flows and it does not affect amount of cash flow
Indirect methods of statement of cash flow?
indirect method is that method in which net income from income statement is adjusted for non cash items like deprecation to arrive at actual cash flow from operating activities.
Why is depreciation taken out of both income statement and cash flow statement?
Depreciation is added back to net income in cash flow statment because it is not involve directly in reduction of cash while preparing cash flows of operating activities using indirect method.
How is bank overdraft treated in the cash flow statement?
Prime purpose of preparing cash flow statement is to tally the closing bank balance with opening bank balance so if there is a bank overdraft or negative bank balance it will automatically adjusted when complete cash flow statement is prepared. If after the preparation of cash flow, cash flow balance and bank balance don't tally it means there is some mistake in cash flow statment and it should be reviewed for any correcions.
When preparing a Cash Flow statement under the indirect method you would?
Adjust the net income for non cash items to find cash flows from operating activities.
What is another name for cash flow of statement?
Another name of cash flow statement is fund flow statement.
What is cash-flow statement?
Cash flow statement is the statement which show the cash flow from operating, financing and investing activities.
Will both the direct and indirect methods produce the same cash flow from operating activities?
Yes direct and indirect methods are just different reporting styles and it doesn't means that by making cash flow statement from different methods may change the amount of cash flows.
