What is a cash flow statement template?
The cash flow statement is one of the three major financial statements. This statement summarizes the movement of cash in the company. A cash flow statement template is an easy way to create a cash flow statement using your own company’s financial information.
There are two methods of calculating cash flow, which are the direct method and indirect method. The cash flow statement is broken up into three sections: Operating Activities, Investing Activities, and Financing Activities. Operating activities include anything related to the operations of the business. Investing activities includes any investments the company is making which can include purchasing new equipment, buying stocks in other companies, or selling old equipment. Financing activities relate to how the company is being financed which can include a line of credit, bank loan, debt from investors, and repayment of any debt.
What is the direct cash flow statement method?
The direct method for the cash flow statement is often used if a company is using the cash basis of accounting instead of accrual. The direct method is also known as the income statement method because the operating section of the cash flow statement closely reflects what happened on the income statement for the time period.The direct method for the statement of cash flows provides more detail about operating cash flow accounts but it’s more time consuming to create.
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