Cash Flow Statement – an Indirect Approach Here's an approach you might take to solving indirect method statements of cash flow problems. Start by giving the financial statements and any other information given a good look-over. If you are given a beginning and ending cash balance, you will be able to determine the net cash flows for the year by taking the difference between those two numbers. Start at the top of the balance sheet. Circle cash--you won't use it until the very bottom of the statement. Read down through the accounts listed until you get to the last current asset. Put a line under it. The remaining assets should be long term assets and accumulated depreciation. Look at the second half of the balance sheet. Draw a line under the last current liability. Circle any dividends payable or short term notes payable, because they’re part of the financing section. Find the net income either on the income statement or in information given. Look for any depreciation expense. If none is given and the problem doesn’t indicate that
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