Intro to Cash Flow Statements | Direct Method

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Learn all about the Cash Flow Statement and how to prepare it using the Direct Method.

▪ Cash Flow Accounting with the Direct Method (Part 2) →    • Prepare A Cash Flow Statement | Direc...  
▪ Cash Flow Accounting with the Indirect Method (Part 3) →    • Prepare A Cash Flow Statement | Indir...  

Many people have a hard time getting to grips with the Statement of Cash Flows, but in this episode of Accounting Basics for Beginners we break it down into nice and tasty, brain digestible chunks.

You'll learn why CASH IS KING, and why the Direct Method is preferred by Investors. We break down the Cash Flow Statement into it's three sections:

→ Cash Flows from Operating Activities
→ Cash Flows from Investing Activities
→ Cash Flows from Financing Activities

Last but not least... I'll explain why despite all the advantages of the Direct Method. Most corporations opt for the Indirect Method instead.

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⏱️TIMESTAMPS
00:00 - Intro
00:51 - Cash is King
01:23 - Difference between Cash and Profit
01:53 - Difference between Cash and Cash Flows
02:07 - Accrual Basis Doesn't Measure Cash Flows
02:34 - The Biggest Reason Start-Ups Fail
03:06 - What is a Cash Flow Statement?
03:53 - How does the Cash Flow Statement Work?
04:56 - Cash Flow from Financing Activities
05:30 - Cash Flow from Investing Activities
06:46 - Cash Flow from Operating Activities
07:35 - What is the Direct Method?
07:58 - How the Direct Method Works
10:21 - Advantages of the Direct Method
10:38 - Disadvantages of the Direct Method

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