An Evaluation of the Decision Usefulness of Cash Flow Statements by Australian Reporting Entities

Jones, Stewart; Romano, Claudio; Smyrnios, Kosmas X.

doi:10.1080/00014788.1995.9729934

Cited by 53 publications

(69 citation statements)

References 14 publications

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“…International accounting standards explain these two approaches: Under direct method cash receipts (such as cash receipts from sale of goods or rendering services) and cash payments (such as cash payments to suppliers for the purchase of goods and for employees), both are disclosed separately, Orpurt and Zang (2009) demonstrated that direct method provides information which may be useful in estimating future cash flows and future earnings. According to Jones et al (1995), Kojima (2012), Widjaja (1998), direct method is better for understanding cash flow data. Jones et al (1995) found that direct method facilitates cash flow analysis, and is a better indicator of company solvency.…”

Section: Statement Of Cash Flows and Qualitative Characteristics Of Amentioning

confidence: 99%

“…According to Jones et al (1995), Kojima (2012), Widjaja (1998), direct method is better for understanding cash flow data. Jones et al (1995) found that direct method facilitates cash flow analysis, and is a better indicator of company solvency.…”

Section: Statement Of Cash Flows and Qualitative Characteristics Of Amentioning

confidence: 99%

“…8, No. 2;2016 conceptual framework. Goyal ( 2004 ) study is related to the conceptual framework , precisely relevance and reliability.…”

Section: Statement Of Cash Flows and Qualitative Characteristics Of Amentioning

confidence: 99%

“…Findings reveal that direct method is more understandable and useful for decision making than the indirect method. Jones et al (1995) focused on internal instead of external (preparers rather than users); they surveyed 210 Australian public companies. The survey indicated that a majority of respondents preferred the direct method, because it helped users to understand the cash flow data, facilitated cash flow analysis, and is a better indicator of company solvency.…”

Section: Literature Reviewmentioning

confidence: 99%

“…8, No. 2;2016209 1992-1997. The results indicate that components of operating cash flow have incremental explanatory power for market returns over aggregate operating cash flows for both industrial and mining companies when they also have significant incremental predictive ability for future (one year ahead) operating cash flows.…”

Section: Literature Reviewmentioning

confidence: 99%

See 4 more Smart Citations

The Preference of Direct or Indirect Methods in Preparing the Statement of Cash Flows in Decision Making: An Academic Perspective

Abdullah¹,

Majed²,

Aymen³

2016

IJEF

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Two methods are used when reporting cash flows from operating activities: the direct method or the indirect method, both are acceptable from IAS with a preference of direct method. Thus, this paper examines which method of reporting the statement of cash flows provides useful information the decision makers rely on for decision making purposes. To achieve this aim, participants were selected from academic sector represented by universities professors. The study is based on the conceptual framework: qualitative characteristics of accounting information. To be useful, information must be relevant and represents faithfully what it claims to represent. In order to distinguish more useful financial information from those less useful, enhancing qualitative characteristics were examined. Results show that academic professors provide support for direct method of reporting cash flows over indirect method. The study sought to determine the effect of academic rank on these results. Evidence reveals that full and associate professors endorsed the preference of direct method more than assistant professors and lecturers. These results recommend the legislative bodies and entities to adopt the direct method in preparation the statement of cash flows.

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Section: Statement Of Cash Flows and Qualitative Characteristics Of Amentioning

confidence: 99%

Section: Statement Of Cash Flows and Qualitative Characteristics Of Amentioning

confidence: 99%

“…8, No. 2;2016 conceptual framework. Goyal ( 2004 ) study is related to the conceptual framework , precisely relevance and reliability.…”

Section: Statement Of Cash Flows and Qualitative Characteristics Of Amentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

See 3 more Smart Citations

The Preference of Direct or Indirect Methods in Preparing the Statement of Cash Flows in Decision Making: An Academic Perspective

Abdullah¹,

Majed²,

Aymen³

2016

IJEF

View full text Add to dashboard Cite

show abstract

Watchdogs or straw dogs? A critical appraisal of the UK regulatory framework with respect to (non-)compliance with financial reporting standard no. 1

Jupe

Rutherford

1997

Int. J. Audit.

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Self-Referential Lobbying of the Accounting Standards Board: The Case of Financial Reporting Standard No. 1

Jupe

2000

Critical Perspectives on Accounting

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An Evaluation of the Decision Usefulness of Cash Flow Statements by Australian Reporting Entities

Cited by 53 publications

References 14 publications

The Preference of Direct or Indirect Methods in Preparing the Statement of Cash Flows in Decision Making: An Academic Perspective

The Preference of Direct or Indirect Methods in Preparing the Statement of Cash Flows in Decision Making: An Academic Perspective

Watchdogs or straw dogs? A critical appraisal of the UK regulatory framework with respect to (non-)compliance with financial reporting standard no. 1

Self-Referential Lobbying of the Accounting Standards Board: The Case of Financial Reporting Standard No. 1

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