
Statement of
Direct method: It reports cash receipts and disbursements arising out of operating activities. Difference between these amounts helps us arrive at the net cash flows from operating activities.
Indirect method: Indirect method is the most widely used method to compute cash (used) provided by operating activities. Under this method net cash flow is determined by adding back noncash expense and losses to net income and deducting all noncash income and gains from net income.
(a) To prepare: To prepare cash flow statements for operating activities (Use direct method).
(b) To determine: To determine the statement of cash flows using the indirect method.

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