Adrien, Geert, Frank Happened to have my accounting textbook handy this morning.
The direct and indirect methods differ only in the way they calculate the cash flows from operating activities. The IFRS encourages the use of the direct method but does not exclude the indirect method. The following are from the Australian 5th edition of Horngren et al (http://pearson.com.au/products/M-N-Nobles-Mattison-Matsumura-Best-Frase/M-N-Nobles-Tracie-et-al/Horngren-s-Financial-Accounting/9781486021079?R=9781486021079 link is for current edition - diagrams form my copy of 5th edition). which is from the relevant Australian AASB107 standard which is adopted almost directly from the IFRS IAS 7 but does not permit use of the indirect method in Australia. The FASB in the US encourages use of the direct method but does not bar use of the indirect method (https://www.fasb.org/summary/stsum95.shtml). These are of course for accrual accounting and assume use of the conventional structuring of the account tree for a business for Current and Non-Current Assets and Liabilities. The outlines of the methods are attached Horgren_CashFlow_direct.png <http://gnucash.1415818.n4.nabble.com/file/t375329/Horgren_CashFlow_direct.png> Horgren_CashFlow_indirect.png <http://gnucash.1415818.n4.nabble.com/file/t375329/Horgren_CashFlow_indirect.png> and a simple sample Horgren_CashFlow_Sample.png <http://gnucash.1415818.n4.nabble.com/file/t375329/Horgren_CashFlow_Sample.png> There recommended calculations for the Operating Section start from the Income Statement (bold items should be line items in the Income Statement) Receipts: >From Customers = *Sales Revenue* + Decrease in A/R - Increase in A/R >From Interest =*Interest Revenue* + Decrease in interest Receivable -Increase in Interest Receivable >From Dividends =*Dividend Revenue* + Decrease in Dividends Receivable -Increase in Dividends Receivable Payments: For inventory = *COGS* +Increase in Inventory _Decreas in Inventory + Decrease in A/P - Increase in A/P Other items = *Operating Expenses* +Increase in PrePaid Expenses - Decrease in PrePaid Expenses +Decrease in Accrued Liablities - INcrease in Accrued Liabilities to Employees =* Salary Expense* + Decrease in Salary/Wages Payable - Increase in Salary/Wages Payable For Interest = *Interest Expense* - Decrease in Interest Payable + Increase in Interest Payable For Income tax = *IncomeTax Expense* + Decrease in Income tax Payable - Increase in Income tax Payable. The Investing Activities Section is calculated as follows: Horgren_CashFlow_Investing.png <http://gnucash.1415818.n4.nabble.com/file/t375329/Horgren_CashFlow_Investing.png> and the Financing calculations Horgren_CashFlow_Financing.png <http://gnucash.1415818.n4.nabble.com/file/t375329/Horgren_CashFlow_Financing.png> the toals from each section are then summed to give the nett increase or decrease in Cash The cash balance from the Balance Sheet at the start of the period is added from this and should equal the cash balance from the Balance Sheet at the end of the period. There are also calculation methods for operating flows for the indirect method. The other sections are the same Horgren_CashFlow_Operating_indirect.png <http://gnucash.1415818.n4.nabble.com/file/t375329/Horgren_CashFlow_Operating_indirect.png> sample presentation for the indirect method is Horgren_CashFlow_Sample_indirect.png <http://gnucash.1415818.n4.nabble.com/file/t375329/Horgren_CashFlow_Sample_indirect.png> The report calculation under DRS21 as describe in the reference Frank provided for Germany does not appear to be conceptually different from the indirect method but has specific references to line items in the formats of other reports under DRS21 David Cousens ----- David Cousens -- Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-Dev-f1435356.html _______________________________________________ gnucash-devel mailing list gnucash-devel@gnucash.org https://lists.gnucash.org/mailman/listinfo/gnucash-devel
