IAS 7Chapter 4Lesson 1
The direct method: gross receipts and payments
Step 1 of 8Learning objectives
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The direct method presents the major classes of gross operating receipts and payments: customers, suppliers, employees. IAS 7 encourages it, because it helps estimate future cash flows. The amounts come from the accounting records or are obtained by adjusting income and expenses for changes in inventories, receivables and operating payables.
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Learning objectives
- Explain the direct method, its benefit and the two ways of obtaining the information.
- Calculate receipts from customers and payments to suppliers and employees.