Direct method: Difference between revisions
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In relation to a Cashflow statement, the Direct method shows all the main categories of gross cash receipts and payments explicitly. | In relation to a Cashflow statement, the Direct method shows all the main categories of gross cash receipts and payments explicitly. | ||
[[File:Cash_flows_-_Direct_v_Indirect_presentation.png|{400}px|400px]] | |||
Contrasted with the Indirect method, which starts with a reported profit/(loss) figure and then adjusts it to calculate the net cash movement for a period. | Contrasted with the Indirect method, which starts with a reported profit/(loss) figure and then adjusts it to calculate the net cash movement for a period. | ||
The indirect method is more widely used in external financial reporting. | The indirect method is more widely used in external financial reporting. | ||
Revision as of 00:33, 1 January 2021
In relation to a Cashflow statement, the Direct method shows all the main categories of gross cash receipts and payments explicitly.
Contrasted with the Indirect method, which starts with a reported profit/(loss) figure and then adjusts it to calculate the net cash movement for a period.
The indirect method is more widely used in external financial reporting.
Even though financial reporting standards encourage the use of the direct method.
