## Documentation Index

Access the complete documentation index at:
https://www.zoho.com/ke/books/kb/llms.txt

Use this file to discover all available documentation pages before proceeding.

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# What method is followed for computing a cash flow statement?

In Zoho Books, the **Cash Flow statement** is computed using **Indirect** method. This method essentially adjusts the non cash transactions from the net income figure from the income statement (Profit and loss report: Accrual basis).

A few examples are as follows for non-cash transactions:

*   **Non-cash Expenses:** Adjust the non-cash expenses such as _depreciation_ and _amortization expenses_. When recording a depreciation expense the actual cash is not going out of business, which will be added back to the net income.
    
*   **Changes in Working Capital:** Adjust for changes in current assets and liabilities. For example, if accounts receivable increased by $10,000, we deduct that amount from net income because it represents sales that have not yet been collected in cash. Conversely, if accounts payable decreased by $5,000, we add that amount because it represents a decrease in expenses that have not yet been paid.
    

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