Direct method: Difference between revisions
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imported>Doug Williamson (Layout.) |
imported>Doug Williamson (Expand comparison.) |
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In relation to a Cashflow statement, the Direct method shows all categories of 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. | ||
Contrasted with the Indirect method, which starts with a reported profit/(loss) figure and then adjusts it to calculate the net cash movement. | |||
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. | ||
Even though financial reporting standards encourage the use of the direct method. | |||
== See also == | == See also == | ||
* [[Cashflow statement]] | * [[Cashflow statement]] | ||
* [[Financial reporting]] | |||
* [[Indirect method]] | * [[Indirect method]] | ||
[[Category:Accounting,_tax_and_regulation]] | |||
[[Category:Cash_management]] | [[Category:Cash_management]] | ||
Revision as of 16:33, 3 December 2020
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.
