Direct method

From ACT Wiki
Revision as of 00:33, 1 January 2021 by imported>Doug Williamson (Add illustration.)
Jump to navigationJump to search

In relation to a Cashflow statement, the Direct method shows all the main categories of gross cash receipts and payments explicitly.


{400}px


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.


See also