Answer to Question #312546 in Management for MAN

Question

Cash flow statement complements the income statement and the balance sheet summarizing all cash inflows and outflow transactions in the company within the given financial year. However, there are two different methods of preparing the cash flow statement – direct and indirect. Enlist the differences between Direct and Indirect method of cash flow statement.

Answer 1

Net income. While it is arrived at through from the bottom of the income statement links to the balance sheet and cash flow statement. On the balance sheet, it feeds into retained earnings and on the cash flow statement, it is the starting point for the cash from operations section.