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Unformatted text preview: came from and what it was spent on. Indirect Method Although the Financial Accounting Standards Board favors the direct method for preparing the statement of cash flows, most companies do not use the direct method, opting instead for the indirect method because it is easier to prepare and provides less detailed information to competitors. The indirect method begins with the assumption that net income equals cash and adjusts net income for significant non-cash income statement items such as depreciation, amortization, and gains and losses from sales, and for net changes in current asset, current liability, and income tax accounts....
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- Spring '09