Question

Financial statement preparers have two choices in preparing the statement of cash flows: the indirect method and the direct method. The indirect method is used extensively in practice even though the F.A.S.B. has expressed a preference for the direct method. In your initial post, discuss the similarities and differences between the direct and indirect methods, and the advantages of using each method. Your answer should illustrate understanding of the cash flow statement. A minimum of 200 to 200 words is required for your answer

no pictures of answer

Answer 1

insie Answer → Under Direct method of cash flow the cash flows from operatings acte vites includes the amount for lines such as cash from customers and Cash paid to suppliers. Whereas indirect method shows bet income followed by the ad fugements needed to convert the total het income → followed by the adjustments neede to convert the total net income to the cash provided by operating acheviking. → Direct method cell actual cach flow foom operating amformation from the Company's operation segment instead of using accural accounting valued Scanned with CamScanner

→ While under indirect method, the net cash flow foom operating activities is determined by adjusting profit (09) loss for the Efects of non cosh transaction » Also under direct method the statement of cash flows reports het cash flow from as major classes of receipts and cash operating aduilles operating cash disbursements, * - ra Scanned with CamScanner cs