Understanding the Cash Flow Statement struggled, easier

jawz

I forgot how much I struggled with this in reviewing FRA. Anyone have any tips on how to make this any easier?

cchang

Well you just have to suck it up I guess no tricks whatsoever. I still struggle in some areas specially if only deferred tax is given in the question. I know deferred tax assets are treated as assets that means increase in assets means reduce it from NI to generate cash flow using indirect method and decrease means add back in the NI. And, deferred tax liabilities are treated as liabilities wherein increase gets cash flow increased and decrease gets decreased. Put another way, liabilities are supposed to have direct relationship and assets have indirect relationship with the cash flow. However, deferred taxes are treated as non cash items and must be added back to the NI. What is the deal with this? What are deferred taxes?