So, you have to add a depreciation and amortization expense to the profit and loss figure to find cash flow. We assume that PT ABC's depreciation expense in is IDR , . . ProfitLoss on Disposal of Fixed Assets One form of disposal of fixed assets is by sale. The form of transactions related to fixed assets in the indirect method cash flow statement will be entered in the cash flow section from investment activities. As we all know, profit and loss on the disposal of fixed assets will affect the profit and loss value in the profit and loss statement . So, you have to exclude the profit-loss value from the operating activities section. Gains on the sale of assets will add to profit and loss, so the value of these profits will be deducted from operating activities when preparing the indirect method cash flow statement. On the other hand, losses will reduce profits, so the loss figures will be put back into the net profit value and added to it. 

Accounts Receivable In the indirect method cash flow report, you must pay attention to any changes that occur in the accounts receivable account. Is there an increase or decrease compared to the previous year? We already know that the normal account for trade receivables is next to the debit. That means, if there Job Function Email Database is an increase in receivables, the receivables will be debited, and there will be a reduction in the credit account. We assume that the value of trade receivables in PT ABC's financial statements in is IDR , , . Then in it was IDR , , . There was an increase in receivables of IDR , , . If input using the indirect method, the increase in receivables will be in the debit position, which is opposite to the characteristics of net profit which is next to the credit.



Because the two have opposite properties, the value of IDR , , will be adjusted and reduced to net income. . Prepaid Expenses Even though the name of this account is an expense, the prepaid expense account in the indirect method cash flow statement is interpreted as a receivable. Examples of these accounts are Prepaid Insurance, or prepaid rent. With the same characteristics as receivables, the normal account of this account is debit. When this prepaid expense is reduced, it will be credited with the appropriate amount. We assume that PT ABC had prepaid insurance in amounting to IDR , . and in it decreased to IDR , , . So there was a decrease in the  amounting to IDR , . . The value of this change will increase net profit because the decrease in value is in the same direction as the nature of net profit next to credit.