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Accounting
Direct Method
A way to prepare the operating section of the statement of cash flows that lists actual cash receipts and cash payments.
The direct method is more intuitive but harder to prepare, so few companies use it. The FASB prefers it, but the indirect method is allowed and more popular.It's like showing the exact cash that came in the front door and went out the back door instead of starting with a summary number.
Real world: You list cash received from customers $180,000 minus cash paid to suppliers $95,000 minus cash paid for salaries $45,000 to get cash from operations.
💡 The direct method feels more real because it shows the actual cash moving, but it's a lot more work to create.