<Li> Payment of dividend taxes in exchange for assets </Li> <P> The direct method of preparing a cash flow statement results in a more easily understood report . The indirect method is almost universally used, because FAS 95 requires a supplementary report similar to the indirect method if a company chooses to use the direct method . </P> <P> The direct method for creating a cash flow statement reports major classes of gross cash receipts and payments . Under IAS 7, dividends received may be reported under operating activities or under investing activities . If taxes paid are directly linked to operating activities, they are reported under operating activities; if the taxes are directly linked to investing activities or financing activities, they are reported under investing or financing activities . Generally Accepted Accounting Principles (GAAP) vary from International Financial Reporting Standards in that under GAAP rules, dividends received from a company's investing activities is reported as an "operating activity," not an "investing activity ." </P> <P> Sample cash flow statement using the direct method </P>

Where does tax go in cash flow statement
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