The Structure, and What the Indirect Method Hides

Three sections: operating activities, investing activities, and financing activities. The classification of an item determines the story the statement tells, which is why classification is worth close attention.

The operating section may be presented by the direct method, showing actual cash receipts and payments, or the indirect method,

Every filing season produces the same conversation, and most firms handle it badly. A client's return has been filed, weeks have passed, nothing has happened, and the client wants to know why. The unhelpful answer — that the IRS is backed up — is true, unsatisfying, and does nothing to protect the client from the consequences a delay can actually create.

The useful version of this conversation has three parts: knowing what category of delay you are dealing with, knowing how to find ...