{"id":659,"date":"2018-04-19T20:41:19","date_gmt":"2018-04-19T20:41:19","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/?post_type=chapter&p=659"},"modified":"2024-04-29T17:36:04","modified_gmt":"2024-04-29T17:36:04","slug":"introduction-to-direct-method-versus-indirect-method","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/chapter\/introduction-to-direct-method-versus-indirect-method\/","title":{"raw":"Introduction to Direct Method versus Indirect Method","rendered":"Introduction to Direct Method versus Indirect Method"},"content":{"raw":"

What you'll learn to do:\u00a0Distinguish between the Direct and Indirect methods of preparing a statement of cash flow<\/h2>\r\nThere are two ways we can build a cash flow statement. Both ways end up at the same answer, but in a different way.\r\n\r\nThe direct method, the income statement is reformulated on a cash basis, rather than an accrual basis from the top of the statement (the income part) to the bottom (the expense part).\r\n\r\nThe indirect method works from net income, so the bottom of the income statement, and adjusts it to the cash basis. We will look at both methods with the same data, so you can see the differences in analysis, but the same ending number.","rendered":"

What you’ll learn to do:\u00a0Distinguish between the Direct and Indirect methods of preparing a statement of cash flow<\/h2>\n

There are two ways we can build a cash flow statement. Both ways end up at the same answer, but in a different way.<\/p>\n

The direct method, the income statement is reformulated on a cash basis, rather than an accrual basis from the top of the statement (the income part) to the bottom (the expense part).<\/p>\n

The indirect method works from net income, so the bottom of the income statement, and adjusts it to the cash basis. We will look at both methods with the same data, so you can see the differences in analysis, but the same ending number.<\/p>\n\n\t\t\t

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Candela Citations<\/h3>\n\t\t\t\t\t
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