Describe the indirect method and how it adjusts net income from an accrual accounting calculation to a cash flow amount.
February 13, 2024 Comments Off on Describe the indirect method and how it adjusts net income from an accrual accounting calculation to a cash flow amount. Do My assignment Assignment-help
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URL to The Home Depot’s SEC Form-10: https://www.sec.gov/ix?doc=/Archives/edgar/data/354950/000035495023000059/hd-20230129.htm#i34ff7b01e284464c95e860d997837e7d_85
This is the fourth section of your SEC 10K project:
Statement of Cash Flows
The goal of these projects, and the end of course SEC10K, is to “tell a story” about the corporation’s business environment, operational performance, and financial position.
The goal of these projects, and the end of course SEC10K, is to use your knowledge of accounting concepts “tell a story” about the corporation’s business environment, operational performance, and financial position.
REQUIREMENT: Between Weeks 2 and 6, you will develop one part of the SEC 10K project. In each of the projects you are to prepare a formal business report addressing each assignment’s requirements. You should incorporate the accounting terms/concepts learned in your assigned readings to demonstrate an understanding of accounting terms/concepts, using these concepts to explain to your chosen corporation’s financial statements to the company’s Senior Management. The goal is to develop important business writing skills, incorporating accounting concepts/terminology explanations to help management read/interpret the financial reports.
Week 5 will focus on your Corporation’s Statement of Cash Flows.
There are three main sections to the statement of cash flows: Cash flows from Operating Activities, Cash flows from Investing Activities, and Cash Flows from Financing Activities.
The balance sheet and income statement provide essential information to prepare the cash flow statement. The relationship between these two financial reports with the statement of cash flows may be summarized as follows:

1. Net income (from the income statement) is a measure of operating activities, but the income statement reports net income based on financial accounting, not cash flows. Using the Direct Method of calculating Cash Flows from Operating Activities, net income is adjusted from an accrual financial accounting measure to determine Cash Flows from Operating Activities.
2. Cash flows from the sale and purchase of long-term assets are reported in the investing activities section.
3. Cash flows from changes in long-term liabilities and owners’ equity are reported in the financing activities section.
• Reviewing your corporation’s statement of cash flows: what do you learn about your SEC 10-K company as you view the four financial statements together? Use course resources to explain the purpose of the Statement of Cash Flows.
• How about a conceptual explanation of this report? What is reported in each of the sections? What is the statement’s purpose and goal? Why is this report important?
• Do you see net income from the income statement on your statement of cash flows? Describe the indirect method and how it adjusts net income from an accrual accounting calculation to a cash flow amount.
• What is the primary source of Cash? Operating, financing, or investing activities? Is this a financially healthy way for the corporation to obtain cash flows? What activities provide the healthiest source of cash flows (i.e., operating, investing, or financing activities)?