期刊名称：Asian Journal of Economics, Business and Accounting
印刷版ISSN：2456-639X
出版年度：2020
卷号：16
期号：1
页码：19-28
DOI：10.9734/ajeba/2020/v16i130228
语种：English
出版社：Sciencedomain International
摘要：This paper is a response to the ongoing debate in the accounting profession on whether the direct method is better than the indirect method when reporting cash flows from operating activities. The debate has its roots from the standard setters who prefer the direct method and are even debating on whether to make the direct method mandatory. The contention being that the direct method is a better method than the indirect method when reporting cash flows from operating activities since the disaggregation of its components suggests more disclosure. More disclosure in financial statements has been a cry from the financial statement users such as the creditors and investors. This qualitative argument will therefore show the merits of both the direct and the indirect method before getting to a conclusion on which method is better than the other. Further, it is a contribution to the ongoing debate in the accounting profession that can guide the standard setters as they deliberate on the possibility of making the direct method mandatory. In addition, a contention map and an argument map are used as roadmaps of the ideas being discussed in this study.
