Section 1
Cash Flow Accounting
Importance of Cash Flow Accounting
The statement of cash flows provides insight that the balance sheet and income statement do not, particularly in regard to a company's cash position.
Key Considerations for the Statement of Cash Flows
The statement of cash flows highlights the activities that directly and indirectly affect a company's overall cash balance.
Section 2
Calculating Cash Flows
Preparation of the Statement of Cash Flows: Direct Method
There is an indirect and a direct method for calculating cash flows from operating activities.
Preparation of the Statement of Cash Flows: Indirect Method
The indirect method starts with net-income while adjusting for non-cash transactions and from all cash-based transactions.