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16.6 Appendix: Prepare a Completed Statement of Cash Flows Using the Direct Method

Direct Method​

Direct Method:

  • Shows actual cash receipts and payments
  • More detailed
  • Less common
  • Shows cash from customers, cash to suppliers, etc.

Format:

Cash from Customers                  €XX,XXX
Cash to Suppliers                    (XX,XXX)
Cash to Employees                    (XX,XXX)
Cash for Expenses                    (XX,XXX)
Cash from Operating Activities       €XX,XXX

Luxembourg Compliance Note​

Direct method in Luxembourg:

  • Less common
  • More detailed
  • Must follow PCN format
  • Must comply with standards

Think It Through​

What are the advantages and disadvantages of the direct method versus the indirect method?