Cash flow from operating activities is an important benchmark for determining the financial success of the company’s core business.
Cash flows from operating activities is the first section of the statement of cash flows, which also includes cash from investing and financing activities.
There are two methods of showing cash from operating activities in the cash flow statement: the indirect method and the direct method.
The indirect method starts with net income from the income statement and then adds non-monetary items to get a cash-based figure.
The direct method tracks all transactions for the period on a cash basis and uses the actual cash inflows and outflows in the cash flow statement.
Accrual accounting is a method of accounting in which revenue or expenses are recorded at the time of the transaction, and not at the time the payment is received or made.
Performance Based Management (ABM) is a means of analyzing a company’s profitability by looking at every aspect of its business to determine its strengths and weaknesses.
Adjusting journal entries are used to record transactions that have occurred but have not yet been properly accounted for in accordance with the accrual basis.
The annual report is a corporate document distributed to shareholders, which sets out the financial position and activities of the company for the previous year.
An asset is a resource with economic value that is owned or managed by an individual, corporation or country with the expectation that it will provide benefits in the future.