The only difference between the direct and indirect methods used for the preparation of the statement of cash flows is the way cash from operating activities is calculated.

Question

Quizplus · Accepted Answer

The direct method calculates cash from operating activities by directly recording all cash inflows and outflows related to operating activities, while the indirect method starts with net income and adjusts for non-cash items and changes in current assets and liabilities to arrive at cash from operating activities.

The Only Difference Between the Direct and Indirect Methods Used