Statement of Cash Flows (Indirect Method)
Definition
A cash flow statement that starts from net profit and adjusts for non-cash items such as depreciation and for movements in working capital to arrive at operating cash flow. The indirect method is the common presentation because it reuses figures already in the ledger.
Related Terms in Core Accounting
Financial Statements
The standard set of reports describing a business: the balance sheet, the profit and loss statement, the cash flow statement, the statement of changes in equity, and the accompanying notes. Together they show position, performance and cash generation.
Accounts Payable (AP)
Money your business owes to suppliers and vendors for goods or services received but not yet paid for. Tracked as a current liability on the balance sheet. HelloBooks automates AP with purchase orders, GRN matching, and vendor bill management.
Accounts Receivable (AR)
Money owed to your business by customers who received goods or services on credit. Tracked as a current asset. HelloBooks manages AR through invoicing, payment tracking, aging reports, and automatic reminders.
Accrual Accounting
An accounting method that records revenue when earned and expenses when incurred, regardless of when cash changes hands. Required by GAAP for most businesses above a certain size. Contrasts with cash-basis accounting.
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