Definition of Direct Method in Statement of Cash Flows
The direct method is one of two methods allowed for preparing the statement of cash flows (or cash flow statement). The direct method is recommended by the Financial Accounting Standards Board (FASB). However, in practice the indirect method is by far the most commonly used method.
Differences Between the Direct Method and Indirect Method
For a summary of the differences in the two methods for preparing the statement of cash flows, please click the following: Differences between the direct method and indirect method.
