Prepare the Operating Activities Section of the Statement of Cash Flows Using the Indirect Method In the following sections, specific entries are explained to demonstrate the items that support the preparation of the operating activities section of the Statement of Cash Flows (Indirect Method) for the...
C. Show each line item on the cash flow statement as a percentage of total cash outflows. 解析:选B。编制一般规模的现金流量表有两种方法:① 现金流量表上的每一项目占净收入的百分比;② 每一项现金流入占总流入的百分比,每一项现金流出占总流出的百分比。 Q11-4 Using a common-size income statement...
Preparing the Statement of Cash Flows Using the Direct Method: Illustrating a Simpler ApproachHaber, JeffryWallace, KarenCPA Journal
The direct cash flow method includes all the inflows and outflows of cash from operating activities. Rather than accrual accounting, it uses cash basis accounting, which recognizes revenues when cash is received and expenses when they’re paid, providing a real-time look at cash inflows and out...
(a) Prepare the operating activities section of the statement of cash flows using the direct method. (b) Prepare the operating activities section of the statement of cash flows using the indirect method. Solution (a) direct method The direct method is relatively...
Using the direct method, actual cash inflows and outflows are known amounts. The cash flow statement is reported in a straightforward manner, using cash payments and receipts. Using the indirect method, actual cash inflows and outflows do not have to be known. The indirect method begins with...
The Financial Accounting Standards Board (FASB) prefers that companies use the direct method because it offers a clearer picture of cash flows in and out of a business. However, if the direct method is used, a reconciliation of the cash flow statement to the balance sheet is still recommended...
Here is a line-by-line explanation of how to prepare a statement of cash flows using the indirect method, complete with sample statement.
(1) A statement of cash flows prepared using the direct method produces a different figure to net cash from operating activities from that produced if the indirect method is used (2) Rights issues of shares do not feature in a statement of cash flows ...
A major advantage of the indirect method of cash flows is that the method provides a reconciliation between net income and cash flows.