About This Chapter
Cash Flow Statements: Direct & Indirect - Chapter Summary
In this accounting chapter, our expert instructors compare indirect and direct cash flow statements. You can also review how to prepare and format a cash flow statement. You can work through the chapter at your own pace using any device that has an Internet connection. The chapter also comes with printable transcripts and interactive self-assessment quizzes. If you have any questions, our instructors will be happy to assist you. When you're finished with the chapter, you should be able to:
- Recognize the proper statement and purpose of cash flows format
- Define the concept of cash flow
- Identify sources that are needed for cash flow statement preparation
- Prepare cash flow statements using the direct and indirect methods
1. The Statement of Cash Flows: Purpose, Format & Examples
There are four financial reports that are required in financial statements. In this lesson, you will learn about the fourth and final report - the statement of cash flows. You'll learn what the makeup of the statement is, its purpose, and why it is important to users of the financial statements.
2. What Is Cash Flow? - Definition, Calculation & Example
Companies can't function without sufficient cash flow. In this lesson, you'll learn what cash flow is and how to calculate it, and you'll be provided some examples. You'll also have a chance to take a short quiz.
3. Sources Needed to Prepare the Cash Flow Statement
The cash flow statement is one of the most important pieces of paperwork that a company will produce. In this lesson, we look at where the information for the cash flow statement comes from.
4. Using the Direct Method to Prepare a Cash Flow Statement
In this lesson, we learn how to use the direct method to prepare a cash flow statement. While it may seem straightforward, we'll see that this method actually requires additional work.
5. Preparing a Cash Flow Statement by the Indirect Method
The vast majority of larger businesses prefer to prepare their cash flow statements using the indirect method. This is because, as we'll see in this lesson, much of the information required is already prepared for them.
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Other chapters within the Accounting 201: Intermediate Accounting I course
- Overview of Financial Accounting
- Ethical & Theoretical Frameworks for Financial Accounting
- Preparing a Balance Sheet
- Disclosure Requirements for Balance Sheets
- Preparing an Income Statement
- Evaluating Cash Flows & Time Value of Money
- Preparation of Cash & Receivables
- Systems & Controls in Accounting
- Inventory Process in Accounting
- Business Transactions in Accounting
- Financial Accounting & Management
- Financial Ratios & Business Applications
- Studying for Accounting 201