Cash Flow Statement - Direct Method

The video tutorial from Let'sTute Accountancy covers the preparation of cash flow statements, focusing on the direct method. It begins with a recap of cash flow activities and introduces the direct and indirect methods. The direct method is explained in detail, highlighting how cash inflows and outflows are recorded. An example using XYZ Limited is provided to demonstrate the application of the direct method. The session concludes with a preview of the next session, which will cover the indirect method.

What are the three essential activities classified in cash flow statements?

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Explain the difference between the direct method and the indirect method of preparing a cash flow statement.

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What types of cash inflows are typically included under the direct method?

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How do you derive cash generated from operating activities using the direct method?

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What is the significance of deducting income tax paid when calculating net cash flow from operating activities?

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What does a positive net cash flow from operating activities indicate?

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Describe the process of recording cash flows from investing and financing activities.

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