There are two main methods to confirm income: the total amount method and the net amount method, which involve how to deal with all income or only include the net amount in profits. The total amount method is usually applicable to companies that attach importance to the scale of operating income, and they will include all relevant income in profits. On the contrary, those enterprises that pursue high growth rate and gross profit margin, or for tax incentives, tend to adopt the net method and only confirm the cash actually received or paid.

The preparation of cash flow statement also involves these two concepts. The total amount method lists the total amount of cash inflows and outflows in the cash flow statement, while the net amount method uses the balance method for some specific items, such as cash receipts and payments handled on behalf of customers. The structure of cash flow statement includes a positive statement, which shows the cash flow of operating activities, investment activities and financing activities in multiple steps, as well as supplementary information, including the adjustment of non-cash transactions, the adjustment of net profit and cash flow of operating activities, and the net increase or decrease of cash and cash equivalents.

Direct method and indirect method are different methods to prepare cash flow statement. The direct method focuses on the direct reflection of cash flow, and the indirect method calculates the cash flow of operating activities by adjusting the non-cash items in net profit. The current accounting standards tend to adopt the direct method and require supplementary information of the indirect method.

Generally speaking, the choice of total amount method or net amount method depends on the specific business nature and financial strategy of the enterprise, and the preparation of cash flow statement needs to comprehensively and accurately reflect the cash flow of the enterprise.