Cash flows from operations (CFOs) are derived by converting
The direct method discloses operating cash inflows by source and outflows by use in the operating activities section of the cash flow statement.
Under the indirect method, the operating section would begin with net income and adjust it to arrive at operating cash flow. The other items would appear under the direct method as a cash flow statement prepared under GAAP. Note that cash paid for interest may appear on an indirect cash flow statement under IFRS if classified as a financing activity.
Cash flow activities can be divided into 3 categories
obtaining capital from owners and providing them with a return on (and return of) their investments.
Receipt of dividends and payment of interest are included in operating cash flows.
a) under U.S. GAAP, but may be classified as either operating or investing cash flows under IFRS.