Does the indirect method of accounting deal with not only cash even though it is a cash flow statement?
April 18, 2009 by Accounts Receivable Factoring
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Why do things like accounts payable and change in prepaid rent, inventory, and receivables show up in the statement of cash flows under the indirect method? Aren’t only quantities involving a direct transfer of cash supposed to be listed? Aren’t cash flow statements only supposed to list cold, hard, cash transactions, or can they include accrued items as well?
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Why do things like accounts payable and change in prepaid rent, inventory, and receivables show up in the statement of cash flows under the indirect method? Aren’t only quantities involving a direct transfer of cash supposed to be listed? Aren’t cash flow statements only supposed to list cold, hard, cash transactions, or can they include accrued items as well?
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Factoring Feedback: That’s the direct method and it looks much different. The indirect method is used most often because it’s easier to prepare.