0
What are the major advantages of the indirect method of reporting cash flows from operating activities?
Wiki User
∙ 14y ago
the advantage is that it focuses on the differences between net income and net cash flows from operating activities. Meaning, it makes it more useful to relate the statement of cash flows and the income statement and balance sheet. Also it is less costly to change net income to net cash flow from operating activities.
Wiki User
∙ 14y ago
Add your answer:
Earn +20 pts
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.
What is the difference between the direct method and indirect method?
The main difference between the direct method and the indirect method involves the cash flows from operating activities. Under the direct method, the cash flows from operating activities will include the amounts for lines such as cash from customers and cash paid to suppliers. In contrast, the indirect method will show net income followed by the adjustments needed to convert the total net income to the cash amount from operating activities.
Should a gain on the sale of land be added to net income in calculating net cash flow from operating activities using the indirect method?
It should be deducted from operating activities and should be included in investing activities as dealing with assets is a part of investing activities.
What should be deducted from net income in calculating net cash flow from operating activities using the indirect method?
Depreciation expenses
Cash flow statement prepared using indirect method?
in cash flow statement using indirect method actual net profit from income statement is adjusted for non cash items to arrive at actual cash from operating activities.
Advantages of indirect marketing?
advertanges of indirect marketing
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.
Advantages and disadvantages of indirect taxes?
The advantages of indirect taxes accrue only to the politicians who implement them. The disadvantages of indirect taxes are that they are hidden from the taxpayer.
Which section is affected by the decision to use either the direct method or the indirect method to prepare the statement of cash flows?
The Operating Activities portion of the Statement of Cash Flows is affected by whether the direct or indirect method is used.
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.
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.
In calculating cash flows from operating activities using the indirect method a loss on the sale of equipment is?
While calculating cash flow from operating using indirect method, Loss on sale of equipment is added back to net income as due to loss there is no cash outflow occurs.
