[Anonymous]

I’m almost in tears. Every topic I attempt in FAR I seem to get lost, wrong, or stuck. I thought Cash Flows wouldn’t be so bad, but omg….

The questions in general confuse me, but I CANNOT get my head around the Direct Method especially when it comes to ‘cash paid for operating expenses’.

Does anyone have any advice on how to get these questions/ or explanation on how to do them?

[ZSRizvi]

I know what you mean but this is how I learned the trick for the differences between the direct and indirect method:

Direct Method: Has a DIRECT relationship with assets. If Assets INCREASE , then cash flows under the operating activity will INCREASE. It also has an INDIRECT relationship with liabilities: if Liabilities INCREASE, then cash flows will INCREASE.

Indirect Method: Has an INDIRECT relationship with assets. If Assets INCREASE, then cash flows under the operating activity will DECREASE. It also has a DIRECT with liabilities: if Liabilities INCREASE, then cash flows will INCREASE.

This is the easiest way I can explain it (I don't really think there are any other shortcuts).

You know what helps me is reading through the chapter first, taking notes (just on IMPORTANT facets), then watching the lecture. If you have any accounting books left from college, might help to pop them out.

And don't worry, it might seem intimidating at first but by the end it isn't all that bad. 🙂

I hope I helped somewhat!

BEC (July 2013)
FAR (OCT 2013)
REG (NOV 2013)
AUD (JAN 2014)

The CPA Exam is an opponent that not even the Fellowship of the Ring would want to come across.

I have a long...long...journey ahead of me.

[ZSRizvi]

I know what you mean but this is how I learned the trick for the differences between the direct and indirect method:

Direct Method: Has a DIRECT relationship with assets. If Assets INCREASE , then cash flows under the operating activity will INCREASE. It also has an INDIRECT relationship with liabilities: if Liabilities INCREASE, then cash flows will INCREASE.

Indirect Method: Has an INDIRECT relationship with assets. If Assets INCREASE, then cash flows under the operating activity will DECREASE. It also has a DIRECT with liabilities: if Liabilities INCREASE, then cash flows will INCREASE.

This is the easiest way I can explain it (I don't really think there are any other shortcuts).

You know what helps me is reading through the chapter first, taking notes (just on IMPORTANT facets), then watching the lecture. If you have any accounting books left from college, might help to pop them out.

And don't worry, it might seem intimidating at first but by the end it isn't all that bad. 🙂

I hope I helped somewhat!

BEC (July 2013)
FAR (OCT 2013)
REG (NOV 2013)
AUD (JAN 2014)

The CPA Exam is an opponent that not even the Fellowship of the Ring would want to come across.

I have a long...long...journey ahead of me.

[Anonymous]

@ZSRizvi Thank you very much for responding =). That is a helpful frame for this frustrating topic.

[Anonymous]

@ZSRizvi Thank you very much for responding =). That is a helpful frame for this frustrating topic.

[ZSRizvi]

Wait wait…darn my tired brain (I posted that at like 3AM in the morning LOL).

That sentence for the Direct Method is suppose to say:

It also has an INDIRECT relationship with liabilities: if Liabilities INCREASE, then cash flows will “DECREASE”. Sorry about that. -.-

And you're welcome! 🙂

BEC (July 2013)
FAR (OCT 2013)
REG (NOV 2013)
AUD (JAN 2014)

The CPA Exam is an opponent that not even the Fellowship of the Ring would want to come across.

I have a long...long...journey ahead of me.

[ZSRizvi]

Wait wait…darn my tired brain (I posted that at like 3AM in the morning LOL).

That sentence for the Direct Method is suppose to say:

It also has an INDIRECT relationship with liabilities: if Liabilities INCREASE, then cash flows will “DECREASE”. Sorry about that. -.-

And you're welcome! 🙂

BEC (July 2013)
FAR (OCT 2013)
REG (NOV 2013)
AUD (JAN 2014)

The CPA Exam is an opponent that not even the Fellowship of the Ring would want to come across.

I have a long...long...journey ahead of me.

[Whopper Warrior]

I think you had it right the first time?

yr 1

(debit) invetory 100

(credit) accounts payable 100

cf 0, ap increase

yr 2

(debit) accounts payable 100

(credit) cash 100

cf (100), ap decrease

ALL 4 parts passed summer 13
Ethics October 13
Experience (waiting)

Becker Only

[Whopper Warrior]

I think you had it right the first time?

yr 1

(debit) invetory 100

(credit) accounts payable 100

cf 0, ap increase

yr 2

(debit) accounts payable 100

(credit) cash 100

cf (100), ap decrease

ALL 4 parts passed summer 13
Ethics October 13
Experience (waiting)

Becker Only

[jeff]

There is a very high level overview of cash flows posted today: https://www.another71.com/ninja-blitz/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[jeff]

There is a very high level overview of cash flows posted today: https://www.another71.com/ninja-blitz/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Author]

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