a) INDIRECT METHOD b) CASH FLOW STATEMENT c) FIVE ITEMS THAT ARE REQUIRED TO ADJUSTED TO CONVERT NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITY UNDER INDIRECT METHOD ARE AS FOLLOWS
Work Step by Step
a) Under this method of calculating, cash flow from operating activities, all the required figures are calculated by employing information contained in the profit & loss account and Balance sheet. This method does not use information contained within the accounting records. b) It is the statement which shows the inflow & out flow of cash within an organization. It is basically of three parts - Cash from operating activity - Cash flow from investing activity - Cash flow from financing activity In order to survive, the ability of a company to make profit is not enough, it also important for a company to generate sufficient cash for its survive. This can be ascertain by the cash flow statement. c) - Depreciation on fixed asset and writing off intangible assets like goodwill patent rights etc - Loss or profit on sale of fixed assets - Dividend received on investments - Discount on issue of shares - Increase of decrease in working capital items.