Direct method

Direct method is one of two methods of preparing the cash flow from operating activities section of the statement of cash flows. Each of the major areas of sources and uses of cash for operations is detailed separately.

Definitions

According to College Accounting: A Practical Approach by Slater (13th edition)‎,

Direct method. One of two methods of preparing the cash flow from operating activities section of the statement of cash flows. Each of the major areas of sources and uses of cash for operations is detailed separately.

According to Cost Accounting by Horngren, Datar, Rajan (14th edition),

Direct method. Cost allocation method that allocates each support department's costs to operating departments only.

According to Managerial Accounting by Braun, Tietz (5th edition),

Direct method. A method of presenting cash flows from operating activities that separately lists the receipt and payment of cash for specific operating activities.

Related concepts

• Accounting (alternatively known as accountancy) is management of financial data, information, and knowledge about financial transactions of legal entities. Accountancy tends to include bookkeeping and, depending on a particilar enterprise, may also include quatitative analysis of financial data in the bookkeeping system and/or business intelligence.

Related lectures

• Principles of Accounting.