How does retained earnings get treated when doing an indirect cash flow statement? Is it ignored...
How does retained earnings get treated when doing an indirect
cash flow statement?
Is it ignored or does it go in the finance section?
Thank you,
Homework Answers
Ans: Simply ignored
Explanation:
1) Cash flow statement consists of finding the movement of cash in business by dividing into 3 activities operating, investing, financing
2) An increase/Decrease in retained earnings doesn't make it into a statement of cash flows. It goes into a statement of changes in shareholders' equity, also known as an equity report or statement of retained earnings
3) But the difference in Retained earnings is considered as net income
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