This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Mod # 7 DF Due 6 Jan Contrast the advantages and disadvantages of the direct and indirect methods of preparing the statement of cash flows. Are both methods acceptable? Which method is preferred by the FASB? Which is more popular with businesses? Direct Method: The direct method(also called the income statement method) reports cash receipts and cash disbursements from operating activities.The difference between these two amounts is the net cash flow from operating activities.In otherwords,the direct method deducts operating cash disbursement from operating cash receipts.The direct method results in the presentation of a condensed cash receipts and cash disbursements statement . Indirect Method: The indirect method (or reconciliation method) starts with net income and converts it to net cash flow from operating activities.In oterwords,the indirect method adjusts net income for items that net cash flow from operating activities....
View Full Document
- Spring '11