are raw materials and in process used on direct cash flow statement
Direct labor can be logged into cash flow during the same month in which it is accrued. Material costs, on the other hand, are a little different. You need to include the material cost in cash flow using a time frame that allows you to convert the cost of raw material in cash flow into finished goods for sale. Therefore, if it requires 60 days to convert raw material to finished goods, and your payable period is 30 days after delivery, then enter the cost of goods under material in cash flow 30 days before sales are logged. Working capital can be determined from operating expenses.