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Indirect method |
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Definition of Indirect methodIndirect methodA method of preparing the operating section of the Statement of Cash Flows that does not use the company’s actual cash inflows and cash outflows, but instead arrives at the net cash flow by taking net income and adjusting it for noncash expenses and the changes from last year in the current assets and current liabilities.
Related Terms:Indirect-Method FormatA format for the operating section of the cash-flow statement that algebraic methoda process of service department cost allocation Allowance methodA method of adjusting accounts receivable to the amount that is expected to be collected based on company experience. Average-Cost Inventory MethodThe inventory cost-flow assumption that assigns the average Benefit Ratio MethodThe proportion of unemployment benefits paid to a company’s Benefit Wage Ratio MethodThe proportion of total taxable wages for laid off Bootstrapping, bootstrap methodAn arithmetic method for backing an Capitalization methodA method of constructing a replicating portfolio in which the manager purchases a Completed-Contract MethodA contract accounting method that recognizes contract revenue Current rate methodUnder this currency translation method, all foreign currency balance-sheet and income Direct estimate methodA method of cash budgeting based on detailed estimates of cash receipts and cash Direct methodA method of preparing the operating section of the Statement of Cash Flows that uses the company’s actual cash inflows and cash outflows. direct methoda service department cost allocation approach Direct-Method FormatA format for the operating section of the cash-flow statement that reports actual cash receipts and cash disbursements from operating activities. Direct write-off methodA method of adjusting accounts receivable to the amount that is expected to be collected by eliminating the account balances of specific nonpaying customers. dividend growth methoda method of computing the cost Equity MethodAccounting method for an equity security in cases where the investor has sufficient FIFO method (of process costing)the method of cost assignment that computes an average cost per equivalent First in, first-out costing method (FIFO)A process costing methodology that assigns the earliest First-In, First-Out (FIFO) Inventory MethodThe inventory cost-flow assumption that Flow-through methodThe practice of reporting to shareholders using straight-line depreciation and Full-Cost MethodA method of accounting for petroleum exploration and development expenditures high-low methoda technique used to determine the fixed indirect costa cost that cannot be traced explicitly to a particular Indirect costA cost that is not directly associated with a single activity or event. Such Indirect costsCosts that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead. Indirect laborThe cost of any labor that supports the production process, but which is Indirect quoteFor foreign exchange, the number of units of a foreign currency needed to buy one U.S.$. Indirect TaxesTaxes paid by consumers when they buy goods and services. A sales tax is an example. judgmental method (of risk adjustment)an informal method of adjusting for risk that allows the decision maker Last-In, First-Out (LIFO) Inventory MethodThe inventory cost-flow assumption that assigns the most recent inventory acquisition costs to cost of goods sold. The earliest inventory Log-linear least-squares methodA statistical technique for fitting a curve to a set of data points. One of the method of least squaressee least squares regression analysis method of neglecta method of treating spoiled units in the modified FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per Monetary / non-monetary methodUnder this translation method, monetary items (e.g. cash, accounts Moving average inventory methodAn inventory costing methodology that calls for the re-calculation of the average cost of all parts in stock after every purchase. net present value methoda process that uses the discounted Net Present Value (NPV) MethodA method of ranking investment proposals. NPV is equal to the present value of the future returns, discounted at the marginal cost of capital, minus the present value of the cost of the investment. Normalizing methodThe practice of making a charge in the income account equivalent to the tax savings Payback methodA capital budgeting analysis method that calculates the amount of Percentage-of-Completion MethodA contract accounting method that recognizes contract Purchase methodAccounting for an acquisition using market value for the consolidation of the two entities' Purchase methodAn accounting method used to combine the financial statements of Residual methodA method of allocating the purchase price for the acquisition of another firm among the risk-adjusted discount rate methoda formal method of adjusting for risk in which the decision maker increases the rate used for discounting the future cash flows to compensate for increased risk Simple compound growth methodA method of calculating the growth rate by relating the terminal value to simplex methodan iterative (sequential) algorithm used to solve multivariable, multiconstraint linear programming problems six-sigma methoda high-performance, data-driven approach to analyzing and solving the root causes of business problems Statement-of-cash-flows methodA method of cash budgeting that is organized along the lines of the statement of cash flows. step methoda process of service department cost allocation strict FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per equivalent unit and, in transferring units from a department, keeps the Successful Efforts MethodA method of accounting for petroleum exploration and development Temporal methodUnder this currency translation method, the choice of exchange rate depends on the weighted average method (of process costing)the method of cost assignment that computes an average cost per activity based costing (ABC)A relatively new method advocated for the Direct costingA costing methodology that only assigns direct labor and material costs Value-added taxmethod of indirect taxation whereby a tax is levied at each stage of production on the value
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