A cash flow statement is a report that analyzes the financial movements that affect cash flow.
Cash flow is classified in the following ways:
Operations can be calculated using a direct or indirect method that is explained as follows:
The indirect method starts with the net income from the income statement and adjusts it according to the net changes of accounts receivable (A/R), accounts payable (A/P), and inventory
The direct method sums cash transactions between our customers, suppliers, and employees
Investing includes purchasing and selling assets, such as offices or equipment
Financing includes receiving or paying a bank loan
To create a cash flow statement, we have to find every G/L account that affects the accounts that represent cash assets. In order to be successful at this, we have to team up with an accountant who can help us find and classify these accounts. When the total cash flow in this statement equals the net change of all cash assets then we've successfully...