Based on the previous article, we all know that the Cash Flow of Statement shown on Deskera Books, by default, is using the direct method. However, users are allowed to change the report to the indirect method, if you prefer to.
To view the indirect method, follow the guide mentioned below:
1. Go to the Report tab on the sidebar menu.
2. Click on the Cash Flow Statement under the Financial section.
3. On the report, you can see the toggle button at the top right of the page.
4. Switch the direct report to the indirect report by disabling the direct button.
5. Once you've disabled the direct button, the indirect cash flow statement will be shown.
- The indirect method usually involves the changes in net income/loss with the adjustment in the balance sheet accounts in order to arrive at the amount of cash generated by operating activities.
- For the indirect method, the first line of the statement starts with Net Income/Loss.
- Most of the companies would prefer the indirect method as they keep their records on an accrual basis.