Ask Experts Questions for FREE Help!
Answer   ||    Advanced Search

Ask your question or search...
International Sites: Nederlandse experts vragen
User Name 
Password 
Join   Forgot password? 

Home > Business & Careers > Accounting   »   indirect method of cash flows

Question
 
 
#1  
Old Feb 24, 2008, 10:06 AM
meanqueencobra
New Member
meanqueencobra is offline
 
Join Date: Feb 2008
Posts: 1
meanqueencobra See this member's comment history on his/her Profile page.
indirect method of cash flows

I need an example of an indirect method of completing a statement of cash flows please...thanks.

Reply With Quote
 
     

Answers
 
 
Old Feb 24, 2008, 09:49 PM   #2  
Ultra Member
morgaine300 is offline
 
Join Date: Feb 2008
Location: USA
Posts: 3,683
morgaine300 See this member's comment history on his/her Profile page.morgaine300 See this member's comment history on his/her Profile page.
Difficult to give you an examples because a cash flow can be very large, and because it just depends on what information you have.

What I can do is give you the rules for the indirect method for the operating section. When they refer to direct and indirect, they are only referring to the operating section, as the investing and financing are always direct. (Whether they say so or not.)

You start with the net income off the income statement and make the following adjustments to it:
1) Depreciation and amortization: ADD
2) Gains, SUBTRACT, losses ADD
3) Current Assets: SUBTRACT increases in balance, ADD decreases in balance
4) Current Liabilities: ADD increases in balance, SUBTRACT decreases in balance

To make that a bit easier to memorize... The first two sets are income statement accounts. You're trying to get rid of them. If it was an expense/loss, it would have been a negative on the income statement. So to get rid of it, you'd have to do the opposite: add. Gains are positive on the income statement, so again to get rid of it, do the opposite: subtract. i.e. these are always doing the opposite of what they did on the income statement.

The third and fourth set are balance sheet accounts. The current assets go the opposite direction as the balance did. If it went up, you go down.

Notice that so far everything has been an "opposite." With the one exception of current lliabilities. They go the same direction as the balance change did. If it went up, you go up also. So I memorize this as being the exception.

Notes: One, do not include cash in the current assets, because the entire statement is cash flow and will take care of cash itself. Two, do not include dividends payable in the current liabilities, because it's actually a financing activity, being related to stock, so it doesn't belong in operating. But otherwise this should work.
  Reply With Quote
 
     
 
 
Old Jan 17, 2009, 03:24 PM   #3  
New Member
lisainftw is offline
 
Join Date: Sep 2008
Posts: 3
lisainftw See this member's comment history on his/her Profile page.
This is pertaining to the answer that morgaine300 gave to meanqueencobra about the statement of cash flows-indirect method: Is the only information listed on this statement the operating activities, or is it combined with the information for the direct method also. It doesn't make sense that you would combine both indirect and direct information on a statement, neither does it make sense that you would only report operating activities only. That wouldn't give a full picture of the financial position.

Thanks for your help!
  Reply With Quote
 
     
 
 
Old Nov 7, 2009, 07:29 AM   #4  
New Member
uzair777 is offline
 
Join Date: Nov 2009
Posts: 1
uzair777 See this member's comment history on his/her Profile page.
please one example of cash flow satement indires=ct method paste
  Reply With Quote
 
     

Your Answer
Email me when someone replies to my answer
Join Login



Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes
Ask your question or search...



Similar Threads
cash flows
(0 replies)
indirect method cash flow
(0 replies)
Preparing cash flow statement in indirect method
(1 replies)
how do i prepare an indirect statement of cash flow
(1 replies)
CASH FLOW INDIRECT METHOD (i will appreciate any effort)
(2 replies)

Thread Tools
Show Printable Version Show Printable Version
Email this Page Email this Page
Search this Thread

Advanced Search

Bookmarks





Copyright ©2003 - 2009, Ask Me Help Desk.
All times are GMT -8. The time now is 04:59 PM.