The total amount method and net amount method of revenue recognition, that is, whether revenue recognition is in full or in net amount. Enterprises with high growth rate, high gross profit margin and tax saving usually recognize income by net method, while companies with operating income scale usually recognize income by total method. The gross method and net method of revenue recognition are not determined according to subjective wishes, so it is necessary to fully analyze the background of transactions or services so as to make reasonable judgments.

Several related problems in the structure and compilation of cash flow statement

1. Total amount method and net amount method

The so-called total amount method of cash flow compilation means that the cash inflow and outflow are listed in total amount respectively in the preparation of cash flow, and the income and expenditure do not balance each other.

the net amount method refers to the cash flow that is presented by item after the balance of payments.

The cash flow statement should generally reflect the total amount, so as to fully reveal the direction, scale and structure of cash flow. However, cash received or paid on behalf of customers, as well as cash receipts and expenditures for projects with quick turnover, large amount and short term, should be presented in net terms.

2. direct method and indirect method

the direct method reflects the cash flow from the business activities of the enterprise through the main categories of cash income and expenditure. The indirect method takes the net profit of the current period as the starting point, adjusts the income, expenses, non-operating income and expenses and the increase or decrease of related items, and calculates the cash flow of operating activities.

The current accounting standards stipulate that the direct method is adopted, and at the same time, it is required to disclose the information of adjusting the net profit to the cash flow from operating activities in the notes to the cash flow statement, that is, to calculate the cash flow from operating activities by the indirect method.

3. Structure of cash flow statement

The cash flow statement is divided into two parts: positive statement and supplementary information.

the positive part of the cash flow statement is based on "cash inflow-cash outflow = net cash flow", and adopts a multi-step method to report the cash inflow and outflow of the enterprise separately.

The supplementary information part of the cash flow statement is subdivided into three parts. The first part is the investment and financing activities that do not involve cash receipts and payments; The second part is to adjust the net profit to the cash flow of operating activities, that is, the so-called net method of compiling cash flow statement; The third part is the net increase of cash and cash equivalents.

source: Baidu encyclopedia: cash cash accounting method.