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September 17, 2008

Is the direct method still used in the statement of cash flows?

The direct method of preparing the statement of cash flows is recommended by the Financial Accounting Standards Board (FASB). However, the direct method is rarely used.

The 2007 edition of Accounting Trends & Techniques published by the American Institute of Certified Public Accountants surveyed 600 annual reports to stockholders for the year 2006 and found that only 6 used the direct method, while 594 used the indirect method.

You can read the official FASB pronouncement on the Statement of Cash Flows at www.FASB.org/st.

Learn about Statement of Cash Flows prepared under the indirect method.

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About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the author of the 2010 Master Accounting Download Package which has been praised for it's ability to simplify accounting in a way that anybody can understand.



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Comments

10 Responses to “Is the direct method still used in the statement of cash flows?”

  1. greg on September 17th, 2008 11:44 am

    Hey,
    I need an Accountant for a Small Bus. I have tried many, and only the first one I had was any good. ((I think you know the guy)!! Seriously, it is a problem finding someone, that is knowledgable, and affordable. Can you advise on how to find the right fit? greg

  2. morgan on September 24th, 2008 3:43 pm

    It’s hard to me to do a cash flow Statement

  3. morgan on September 24th, 2008 3:43 pm

    It’s hard to me to do a cash flow Statement
    whatever the method

  4. Yary on October 21st, 2008 6:01 pm

    yes, It is.

  5. chelsi on November 16th, 2008 8:10 am

    hi there my name is chelsi and i would love to join your group

  6. Babor on February 7th, 2009 10:58 pm

    Yeah it is still used today, My teachers are requiring me to do direct method.

  7. Babor on February 7th, 2009 11:03 pm

    yeah, It still used to day. When i am asked to do cash flow in a direct method according to my boss it is more understandable compared to the other one.

  8. orakzai on October 4th, 2009 10:51 am

    I am finding it difficult to classify thousands of transications into those 3 classes for the purpose of making a cash flow statement through direct method. Is there anyone who can tell me as to how to fetch data for that purpose

  9. Loem putheany on October 21st, 2009 2:52 am

    I want asked about examanation a teacher accounting and finance at my country. Can u help me?

  10. nelly on January 25th, 2010 2:50 pm

    tahnk you for a good and clear presentation

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