How Do You Prepare A Cash Flow Statement Using The Direct Method?
The cash flow statement is one of the basic financial statements, along with the balance sheet and income statement. The purpose of the cash flow statement is to report the sources and uses of cash during the reporting period, which is different from reporting profits and losses. The following steps describe how to prepare a cash flow statement using the direct method. Get a detailed general ledger report showing all the entries to the cash and bank accounts for the period for which you want to prepare a cash flow statement, for example a month, quarter, or year. You could also use the cash receipts and disbursements journals. If you do not keep complete accounting records, use a record of all your cash receipts and disbursements for the period. Set up a worksheet to separate all your cash receipts and disbursements into the following categories: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. Cash receipts from oper
