Question: Why might users prefer the direct method of preparing a
Why might users prefer the direct method of preparing a statement of cash flows to the indirect method? Which method is more commonly used? Why?
Answer to relevant QuestionsCost of goods sold is shown as a distinct line item on the income statement. Where is information related to cost of goods sold shown on the statement of cash flows under both the direct and indirect methods? What items are needed to adjust cash ﬂow from operating activities to free cash ﬂow? Why are investors interested in free cash ﬂow? The following information has been obtained from Sardy Corp.’s 2009 income statement and beginning and ending 2009 balance sheets. Required: Prepare the operating activities section of a statement of cash ﬂows using the ...Following are the line items included in the 2009 statement of cash ﬂows prepared by The Nine Muses, Inc. (amounts are in thousands): Proceeds from sale of ...Following is an income statement for Caliope, Inc., for the year ended December 31, 2009, and the company’s balance sheets as of December 31, 2008 and 2009. The prepaid expenses and accrued liabilities included in ...
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