Direct and Indirect Cash Flows
Write a 350-word response regarding the differences between the direct and indirect presentation of cash flows. Why does the Financial Accounting Standards Board allow both methods? Which do you prefer? Why?
Format your response consistent with APA guidelines.
Cash flows are enforced by the FASB. Back in the year 1987, FASB issued a statement of cash flows that generally allowed businesses to issue a statement of cash flows instead of a statement of changes in financial position of the company. In 1988, FASB made a decision to encourage people to use the direct method but not to do away with the other one (Hilton, 1994).
In a direct method, you have the ability…