Indirect method and Intervention account: Difference between pages

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In relation to a Cashflow statement, starting with a reported profit/(loss) figure and then adjusting it to calculate the net cash movement.
Intervention accounts or similar arrangements exist in the USA and some parts of Asia. The concept of an intervention account is that the supplier of goods opens an account with the same bank and branch as its customer.


(The alternative Direct method shows all categories of receipts and payments explicitly.)
Goods are delivered to a local warehouse (often to the ‘order’ of the bank) and the document of title to the goods is sent to the bank. On receipt, the bank has the authority to debit the buyer’s account, credit the supplier’s account and to release the title to the goods to the buyer.
 
The movement of funds is immediate, same-day with no float.


The indirect method is more widely used in external financial reporting.


== See also ==
== See also ==
* [[Cashflow statement]]
* [[Cash concentration]]
* [[Direct method]]
* [[Cash pool]]
* [[Float]]
 
* [[Master account]]
* [[Zero balance account]]

Revision as of 12:11, 28 March 2016

Intervention accounts or similar arrangements exist in the USA and some parts of Asia. The concept of an intervention account is that the supplier of goods opens an account with the same bank and branch as its customer.

Goods are delivered to a local warehouse (often to the ‘order’ of the bank) and the document of title to the goods is sent to the bank. On receipt, the bank has the authority to debit the buyer’s account, credit the supplier’s account and to release the title to the goods to the buyer.

The movement of funds is immediate, same-day with no float.


See also