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The Corporate Finance Institute Accounting
Direct vs Indirect Method of Presentation in Operating Section
Direct Method
Operating Activities
Cash received from customers $800
Cash paid to suppliers (150)
Employee compensations (200)
Other operating expenses paid (250)
Net cash from operating activities 200
Investing Activities
Sale of land 200
Purchase of equipment (300)
Net cash from investing activities (100)
Financing Activities
Common share dividends (200)
Payment on long term debt (300)
Net cash from financing activities (500)
Beginning Cash Balance X
Ending Cash Balance Y
Indirect Method
Operating Activities
Net Income $50,000
Add: Depreciation expense $10,000
Decrease in AR 2,000
Increase in inventory 3,000
Decrease in prepaid expense 4,000
Increase in accounts payable 5,000
Net Cash provided by operating activities $XXX
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