The direct method and the indirect method are two alternative presentations for cash flows from investing activities. What is the difference between the direct method and the indirect method for the statement of cash flows?

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15 January, 03:00

The direct method and the indirect method are two alternative presentations for cash flows from investing activities. What is the difference between the direct method and the indirect method for the statement of cash flows?

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Elaine Romero · Answer 1

Answer: The given statement is false.

Explanation: The direct method and the indirect method are two methods of presenting operating activities of a business in a cash flow statement.

The main difference between direct and indirect method of cash flow is that in indirect method the accountant adjust various factors like non cash transactions from the net income of the year.

Whereas in direct method, transactions involving usage and incoming of cash are used to calculate net inflow or outflow from operating activities.