Direct method
In accounting, direct method means presenting operating cash flows as gross receipts and payments by major class — cash from customers, cash paid to suppliers and employees. Encouraged by ASC 230, but it must still be accompanied by the reconciliation from net income.
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Authority
This definition follows ASC 230-10-45-25.
Every citation in this system, with the text we read and the date we checked it, is in US GAAP and where these rules come from.
Direct method, in use
Quoted from the document that use the word — what it does to an interface, in the spec's own sentence.
Direct method is supported but requires a reconciliation to the indirect result, because US GAAP requires that reconciliation for disclosure anyway (IFRS does not).
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
- Cash flow statement explained: why profit isn’t cashHow the cash flow statement starts at net income, adds back non-cash costs and working capital, splits three activities and ties to the balance sheet.
- Bad debt and write-offs: allowance vs direct methodHow to book a customer who won’t pay: the GAAP allowance under ASC 326, the direct write-off the IRS requires, and what to do if the money comes back.
What it is not called
Each of these is a real word for a different thing. Using it here is what makes a product read as though it was built by someone who has not done the work.
- cash receipts report
Components that render the terms it depends on
No component names this concept outright. Its definition is built out of terms that are named. These render reconciliation, net income.
1Primitives
Family spec5Ledger & tables
Family spec7Dashboard & charts
Family spec10Receivables (AR)
Family spec13Metrics & analysis
Family specNearby in the catalog
No component names this concept outright. These are the ones in its part of the system, which is a weaker claim — but a component nothing links to is a component nobody finds.
Terms this one depends on
Also in Statements
Work with this concept
The calculators that compute it and the ledger payloads that carry it. A definition is where a reader starts; these are where they go next.
Defined in Lexicon. This page is generated from that document, so the two cannot disagree.