Direct Method

A FINANCIAL STATEMENT THAT SUMMARIZES A BUSINESS'S  CASH INFLOWS AND OUTFLOWS OVER A PERIOD OF TIME CASH FLOW STATEMENT COMPARSION VS INDIRECT METHOD                                  BUT... HARDER FOR ACCOUNTANTS TO PREPARE CASH FLOW IS NOT THE     SAME AS PROFIT! MORE USEFUL TO EXISTING & POTENTIAL   INVESTORS, LENDERS AND CREDITORS CASH BASIS OF ACCOUNTING   REVENUE IS RECOGNIZED WHEN         CASH IS RECEIVED EXPENSES ARE RECORDED WHEN              CASH IS PAID OUT MIRRORS AN INCOME STATEMENT PREPARED UNDER THE CASH BASIS THE PRINCIPLE REVENUE GENERATING ACTIVITIES         OF A BUSINESS THE SALE OR PURCHASE OF  NON-CURRENT ASSETS OR    INVESTMENTS THAT SIT OUTSIDE OF A BUSINESS'S        CORE OPERATIONS CHANGES IN SHARE CAPITAL    OR BORROWINGS FROM         A BANK OR THIRD        CALCULATIN THE NET CASH FLOW FOR THE PERIOD             THAT IS RECO CASH FLOW FROM OPERATING ACTIVITIES CASH RECEIPTS FROM COSTUMERS CASH PAID TO SUPPLIERS CASH TO EMPLOYEES INTEREST PAID TAXES PAID NET CASH FLOW FROM OPERATING           DIRECT METHOD CASH FLOW STATEMENT FOR THE PERIOD ENDED MMM-DD-YYYY $  X (X) (X) (X) (X) (A) (B) (C) (D) (E) X/(X)  SUM $ CASH FLOW FROM INVESTING AVTIVITIES   PURCHASE OF PLANT, PROPERTY & EQUIPMENT CASH RECEIPTS FROM SALE OF PPE NET CASH FLOW FROM INVESTING ACTIVITIES CASH FLOW FROM FINANCING ACTIVITIES   PROCEEDS FROM LONG-TERM  BORROWINGS NET CASH FLOW FROM FINANCING ACTIVITIES NET INCREASE /(DECREASE) IN CASH NET INCREASE /(DECREASE) IN CASH WORKINGS     CASH FLOW ARE CALCULATED BY COMPARING OPENING & CLOSING AMOUNTS IN BALANCE SHEET      WITH CORRESPONDING REVENUE EARNED OR EXPENSES INCURRED IN THE INCOME STATEMENT OPENING CASH AS AT MMM-DD-YYYY CLOSING CASH AS AT MMM-DD-YYYY X/(X)  SUM  MOVEMENT IN BALANCE SHEET   PRIOR PERIOD BALANCE SHEET   CURRENT PERIOD   BALANCE SHEET X/(X)  SUM X/(X)   SUM X/(X)   X/(X)   X/(X)   DIFF 'T ACCOUNTS' ARE VISUAL REPRESENTATIONS                OF ACCOUNTS ACCOUNTS RECEIVABLE ACCOUNTS PAYABLE INVENTORY   INTEREST PAYABLE CASH RECEIPTS  X   (A) B/S   OPENING I/S    SALES    B/S   OPENING                            INV PURCHASES   X X OPENING SALARIES EXP OPENING TAX EXP OPENING SALARIES EXP X    B/S X     l/S X    B/S X     l/S     l/S     (G)    B/S OPENING                 X INV PURCHASES    X X    B/S X     l/S   B/S    CLOSING   B/S    CLOSING B/S   OPENING             X (F)     PURCHASE PPE  X    DEPN EXP                       SALES OF PPE             X X             1. NO ACCUMULATED DEPRECATION 2. NO GAIN / LOSS ON DISPOSAL 3. ALL CASH HAS CHAANGED HANDS CLOSING CLOSING CLOSING ASSUMING X     B/S X     B/S  COGS X      l/S X     B/S X     B/S SALARIES PAYABLE TAX PAYABLE PPE (C)   CASH PAID (B)   CASH PAID (E)   CASH PAID B/S   CLOSING CLOSING (D)   CASH PAID DEALER DEALER DEALER DEALER DEALER DEALER DEALER $ X X X X X X X X  X (X) X (F) (G) DEBITS     CREDITS D E A  L E R IXS       lQE VPS    AUV IEE        BIE DNT     lTN ESS      LYN NE          I   DS          T S             I                E                S

Indirect Method

CASH FLOW STATEMENT A FINANCIAL STATEMENT THAT SUMMARIZES A BUSINESS'S CASH INFLOWS AND OUTFLOWS OVER A PERIOD OF TIME WORKINGS THREE STEP PROCESS TO CALCULATE CASH FLOW FROM OPERATING ACTIVITIES                                               UNDER THE INDIRECT METHOD ADD BACK ALL NON-CASH EXPENSES THAT APPEAR ABOVE 'NET PROFIT / LOSS' IN THE INCOME STATEMENT                             THESE DON'T REPRESENT CASH OUTFLOWS AND NEED TO BE REVERSED OUT INDIRECT METHOD BEGINS WITH 'NET PROFIT / LOSS' FROM THE INCOME STATEMENT INDIRECT METHOD CASH FLOW STATEMENT FOR THE PERIOD ENDED MMM-DD-YYYY MOST LARGE BUSINESSES    USE THIS METHOD REVENUE IS RECOGNIZED         AT IT'S EARNED EXPENSES ARE RECORDED  AS THEY ARE INCURRED CASH FLOW IS NOT THE     SAME AS PROFIT! THE PRINCIPLE REVENUE GENERATING ACTIVITIES       OF A BUSINESS THE SALE OR PURCHASE OF NON-CURRENT ASSETS OR  INVESTMENTS THAT SIT OUTSIDE OF A BUSINESSE'S CHANGES IN SHARE CAPITAL   OR BORROWINGS FROM  A BANK OR THIRD PARTY     CALCULATING THE NET CASH FLOW FOR THE PERIOD THAT IS RECONCILED ABOVE COMPARSION VS DIRECT METHOD CASH FLOW FROM OPERATING ACTIVITIES NET PROFIT / (LOSS)    $ X/(X)    $    STEP 1    STEP 1    STEP 2    STEP 3    ADJUST FOR MOVEMENT IN WORKING CAPITAL WORKING CAPITAL = CURRENT ASSETS - CURRENT LIABILITIES ASSETS THAT ARE TYPICALLY CONVERTED            INTO CASH WITHIN ONE YEAR LIABILITIES THAT NEED TO BE SETTLED        WITHIN ONE YEAR FROM NOW   STEP 2   STEP 1    STEP 3 X/(X)  SUM X/(X)  SUM X/(X)  SUM   IDENTICAL TO DIRECT METHOD   IDENTICAL TO DIRECT METHOD   PRIOR PERIOD BALANCE SHEET CURRENT PERIOD BALANCE SHEET X/(X) X/(X) X/(X)   SUM X/(X)  DIFF   (X)    X   (X)      X    X (X)/X     (X)/X (X)/X X/(X)     ADD BACK NON-CASH EXPENSES DEPRECIATION AMORTIZATION (GAIN) / LOSS ON SALES OF NON-CURRENT ASSETS ADJUST FOR MOVEMENT IN WORKING CAPITAL (INCREASE) / DECREASE IN INVENTORY (INCREASE) / DECREASE IN RECEIVABLE INCREASE / (DECREASE) IN PAYABLES NET CASH FLOW FROM INVESTING ACTIVITIES CASH FLOW FROM OPERATING ACTIVITIES NET PROFIT / (LOSS) ADD BACK NON-CASH EXPENSES DEPRECIATION AMORTIZATION (GAIN) / LOSS ON SALES OF NON-CURRENT ASSETS NET CASH FLOW FROM INVESTING ACTIVITIES NET INCREASE / (DECREASE) IN CASH NET INCREASE / (DECREASE) IN CASH OPENING CASH AS AT MMM-DD-YYYY CLOSING CASH AS AT MMM-DD-YYYY CASH FLOW FROM INVESTING ACTIVITIES PURCHASE OF PLANT, PROPERTY & EQUIPMENT CASH RECEIPTS FROM SALE OF PPE CASH FLOW FROM FINANCING ACTIVITIES PROCEEDS FROM LONG-TERM BORROWINGS NET CASH FLOW FROM INVESTING ACTIVITIES LESS USEFUL TO EXISTING & POTENTIAL  INVESTORS, LENDERS AND CREDITORS                                   BUT... EASIER FOR ACCOUNTANTS TO PREPARE ACCRUAL BASIS OF ACCOUNTING REVENUE IS RECOGNIZED        AT IT'S EARNED   EXPENSES ARE RECORDED  AS THEY ARE INCURRED   CASH FLOW IS NOT THE     SAME AS PROFIT!   $    $ X/(X)

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2022 11 15 10.28.34