QUESTION:What is the difference between the direct and indirect method of calculating cash flow from operations?

1. The indirect method starts with gross income and adjusts to cash flow from operations, while the direct method starts with gross profit and flows through the income statement to calculate cash flows from operations.
2. The direct method starts with sales and follows cash as it flows through the income statement, while the indirect method starts with net income and adjusts for non-cash charges and other items.
3. Balance sheet items are not included in the cash flow from operations for the direct method, while they are included for the indirect method.
4. The direct method will result in a lower or higher cash flow figure for operating activities as it details all of the income statement items, while the indirect method only uses net income.