FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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a. explain the information found on the statement of
b. how do the direct and indirect methods of preparing the statement of cash flow different?
Expert Solution
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Step 1
A cash flow statement is a part of a financial statement that shows the cash inflows and cash outflows from and into the organization.
There are two methods of preparation of cash flows statement -
1) Direct method
2) Indirect method
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- What are the objectives related to the statement of cash flows?arrow_forwardEffects of all cash flows affect the balances of various accounts reported in the balance sheet. Also, the activities that cause some of these cash flows are reported in the income statement. What, then, is the need for an additional financial statement that reports cash flows?arrow_forwardHow could (accurate) balance sheet and incomestatement information be used, along with otherinformation, to make a statement of cash flows?What is the primary purpose of this statement?arrow_forward
- Explain the classification of cash flows.arrow_forwardWhat are some of the arguments in favor of using the indirect (reconciliation) method as opposed to the direct method for reporting a statement of cash flows?arrow_forwardDescribe the method used to separate cash flows from operating cash flow?arrow_forward
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