Direct method worksheet – statement of cash flows will put together a working in Excel that we will use to build the statement of cash flows using the direct method. Putting together a well formatted worksheet is the most important step to being able to complete a statement of cash flows. To put a statement of cash flows worksheet together we will need a comparative balance sheet, or balance sheet numbers for the current period and the prior period. The statement of cash flows worksheet we use for the direct method will be similar to the statement of cash flows worksheet we use for the indirect method but not the same. We will include the income statement accounts for the current period when performing the statement of cash flows using the direct method.
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Statement of cash flows direct method will construct the statement o flows using the direct method. The direct method is less common then the indirect method for multiple reasons. One reason the indirect method is more common is that it is often required weather we use the direct method or not. In other words, we often have to use a an indirect method calculation even if we include the direct method. The indirect method provides a reconciliation between net income and cash provided by operations. The direct method generally makes more intuitive scene however. The difference between the direct method and the indirect method is found on the cash flows from operations. In other words, the cash flows from investing activities and financing activities will be the same when using either direct or indirect methods. The direct method is like taking the income statement accounts and converting each account from an accrual method to a cash method.
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