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Adore Myraa
on Nov 13, 2024

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To determine cash payments for operating expenses for the statement of cash flows using the direct method, a decrease in prepaid expenses is added to operating expenses other than depreciation.

Direct Method

A cash flow statement preparation method that itemizes actual cash receipts and payments.

Operating Expenses

Costs associated with the day-to-day functions of a business, excluding costs of production or manufacturing.

Prepaid Expenses

Payments made in advance for goods or services, which are recorded as assets until they are actually used.

  • Ascertain cash inflows from sales and outflows for purchasing goods, overheads, and tax on earnings through the application of the direct approach.
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KIERAN PATRICK ARANASNov 14, 2024
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