Describe how you could index the data on a cash flow statement to ensure it can be quickly located and referred to later. Be specific.
The Cash Flow Statement simply states the inflows and outflows of cash during a finite period of time. By providing a steady and up-to-date financial reporting, a business is able to make appropriate decisions. The cash flow statement is a product of the activities contained in the income statement and balance sheet. It combines the "hidden events" captured in both documents to illustrate what's happening to the bank account. Structure The preparation of a cash flow statement is realized by ranking the cash flow to 3 components, through which the money is received and paid by the company: - Main / operational activities - Investments - Financing Methods of drawing up a statement of cash flows The cash flow statement can be presented in two ways: indirect method and direct method. Direct method The direct method represents the cash flows from various activities through the calculation of outflows and inflows of cash. Nevertheless, this is the method preferred by a minority of companies, since additional information is required for its preparation. Indirect method The indirect method is most preferable for companies, since it compares the cash flow with the net profit received from the main / operating activity. The indirect method of presentation is very popular, because the information required for it is relatively easily assembled from the accounts that a business normally maintains in its chart of accounts.