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  • BUS105: Managerial Accounting
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    Course Introduction
    Course Syllabus
    Unit 1: Managerial Accounting
    1.1: Financial Accounting vs. Managerial Accounting
    Characteristics of Managerial Accounting
    1.2: Key Finance and Management Accounting Personnel
    Planning and Control Functions Performed by Managers
    Key Finance and Accounting Personnel
    1.3: Ethical Issues Facing the Accounting Industry
    Ethical Issues Facing the Accounting Industry
    1.4: Computerized Accounting Systems
    Computerized Accounting Systems
    1.5: Product Costs
    Cost Terminology
    How Product Costs Flow through Accounts
    1.6: Income Statements for Manufacturing Companies
    Income Statements for Manufacturing Companies
    1.7: Basic Math Review
    Math for Accounting
    Unit 2: Job Costing
    2.1: What is a Job Cost System?
    Differentiating Job Costing from Process Costing
    Job Order Costing
    2.2: Direct Material, Direct Labor, Factory Overhead
    How a Job Costing System Works
    Assigning Manufacturing Overhead Costs to Jobs
    Job Costing in Service Organizations
    Summary of Cost Flows at Custom Furniture Company
    2.3: Allocating Overhead Costs
    Why Allocate Overhead Costs?
    Approaches to Allocating Overhead Costs
    Using Activity-Based Costing to Allocate Overhead Costs
    2.4: Practical Uses of ABC Costing
    Using Activity-Based Management to Improve Operations
    Using Activity-Based Costing (ABC) and Activity-Based Management (ABM) in Service Organizations
    Activity-Based Costing
    Unit 3: Process Costing
    3.1: What is a Process Costing System?
    Comparison of Job Costing with Process Costing
    3.2: Direct Materials, Direct Labor, Factory Overhead
    Product Cost Flows in a Process Costing System
    3.3: Assigning Costs in Four Steps
    Determining Equivalent Units
    The Weighted Average Method
    3.4: Cost of Production Report
    Preparing a Production Cost Report
    Process Costing
    Unit 4: Cost Behavior Patterns
    4.1: Cost Behavior Patterns
    Cost Behavior Patterns
    Cost Behavior
    4.2: Cost Estimation Methods
    Cost Estimation Methods
    4.3: Contribution Margin Income Statement
    The Contribution Margin Income Statement
    The Relevant Range and Nonlinear Costs
    High-Low Method
    Scattergraph
    Least Squares Regression
    Appendix: Performing Regression Analysis with Excel
    Unit 5: Cost-Volume-Profit Analysis
    5.1: Cost-Volume-Profit Analysis
    Cost-Volume-Profit Analysis for Single-Product Companies
    Cost-Volume-Profit Analysis for Multiple-Product and Service Companies
    Cost-Volume-Profit Analysis
    5.2: Using Cost-Volume-Profit Models for Analysis
    Using Cost-Volume-Profit Models for Sensitivity Analysis
    Impact of Cost Structure on Cost-Volume-Profit Analysis
    5.3: Cost-Volume-Profit Considerations
    Using a Contribution Margin When Faced with Resource Constraints
    Income Taxes and Cost-Volume-Profit Analysis
    Using Variable Costing to Make Decisions
    Cost-Volume-Profit Analysis, Continued
    Unit 6: Using Differential Analysis to Make Decisions
    6.1: Formatting differential analysis
    Using Differential Analysis to Make Decisions
    6.2: Make-or-Buy Decisions
    Make-or-Buy Decisions
    Relevant Costs for Decision Making: Make or Buy
    6.3: Product Line Decisions
    Product Line Decisions
    Relevant Costs for Decision Making: Drop or Retain
    6.4: Customer Decisions
    Customer Decisions
    6.5: Special Order
    Review of Cost Terms Used in Differential Analysis
    Special Order Decisions
    Relevant Costs for Decision-Making: Special Order
    6.6: Cost-Plus Pricing and Target Costing
    Cost-Plus Pricing and Target Costing
    Unit 7: Budgets
    7.1: Capital Budgeting and Decision Making
    Capital Budgeting and Decision Making
    7.2: Choosing an Evaluation Approach to Investments
    Net Present Value
    The Internal Rate of Return
    Other Factors Affecting NPV and IRR Analysis
    The Payback Method
    7.3: Additional Considerations of Capital Budgetting
    Additional Complexities of Estimating Cash Flows
    The Effect of Income Taxes on Capital Budgeting Decisions
    7.4: The Operating Budget
    Planning and Controlling Operations
    The Budgeting Process
    7.5: The Master Budget
    The Master Budget
    7.6: Budgeting in Nonmanufacturing Organizations
    Budgeting in Nonmanufacturing Organizations
    7.7: Ethical Issues in Creating Operating Budgets
    Ethical Issues in Creating Operating Budgets
    Unit 8: Variance Analysis
    8.1: Flexible Budgets
    Flexible Budgets
    Examples of Flexible Budgets
    8.2: Standard Costs
    Standard Costs
    8.3: Direct Materials Variance Analysis
    Direct Materials Variance Analysis
    Direct Materials Variances
    8.4: Direct Labor Variance Analysis
    Direct Labor Variance Analysis
    Direct Labor Variances
    8.5: Variable Manufacturing Overhead Variance Analysis
    Variable Manufacturing Overhead Variance Analysis
    Finding Variances Diagrammatically
    8.6: Determine Which Cost Variance to Investigate
    Determining Which Cost Variances to Investigate
    8.7: Using Variance Analysis
    Using Variance Analysis with Activity-Based Costing
    8.8: Fixed Manufacturing Overhead Variance Analysis
    Fixed Manufacturing Overhead Variance Analysis
    Unit 9: Performance Evaluation
    9.1: Control Operations in Decentralized Organizations
    Using Decentralized Organizations to Control Operations
    9.2: Establishing Responsibility Centers
    Maintaining Control over Decentralized Organizations
    9.3: Segmented Income
    Comparing Segmented Income for Investment Centers
    9.4: Return on Investment
    Using Return on Investment (ROI) to Evaluate Performance
    9.5: Residual Income
    Using Residual Income (RI) to Evaluate Performance
    9.6: Economic Value Added
    Using Economic Value Added (EVA) to Evaluate Performance
    9.4: Game Products Inc. Warp-Up
    Wrap-Up of Game Products Inc.
    Unit 10: Statement of Cash Flows
    10.1: Purpose of the Statement of Cash Flows
    Purpose of the Statement of Cash Flows
    Cash Flow Statement Background Information
    10.2: The Types of Cash Flows
    Three Types of Cash Flow Activities
    10.3: Preparation of Cash Flow Statements
    Four Key Steps to Preparing the Statement of Cash Flows
    Using the Indirect Method to Prepare the Statement of Cash Flows
    Cash Flow Statement: Indirect Method
    Investing and Financing Sections of Cash Flow Statements
    10.4: Cash Flow Analysis
    Analyzing Cash Flow Information
    Cash Flow Statement Analysis
    Using the Direct Method to Prepare the Statement of Cash Flows
    Cash Flow Statement: Direct Method
    Unit 11: Using Managerial Accounting: Trends and Ratios
    11.1: Trend Analysis
    Trend Analysis of Financial Statements
    Horizontal Analysis
    Financial Statement Analysis
    11.2: Common-Size Analysis
    Common-Size Analysis of Financial Statements
    Vertical Analysis
    11.3: Ratio Analysis
    Ratio Analysis of Financial Information
    Ratio Analysis
    11.4: Chicken Deluxe’s Choice
    Wrap-Up of Chapter Example and Nonfinancial Performance Measures: The Balanced Scorecard
    Study Guide
    BUS105 Study Guide
    Course Feedback Survey
    Course Feedback Survey
    Certificate Final Exam
    BUS105: Certificate Final Exam
    Saylor Direct Credit
    Archived Materials
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  1. BUS105: Managerial Accounting
  2. Unit 10: Statement of Cash Flows
  3. 10.4: Cash Flow Analysis
  4. Using the Direct Method to Prepare the Statement of Cash Flows

Using the Direct Method to Prepare the Statement of Cash Flows

Completion requirements

The same four steps apply to preparing a statement of cash flows in both the direct and indirect methods. The only difference is how the operating activities section is presented in step one; all other steps are the same. Although the presentation of the operating activities section differs with each method, the result is the same.

Click on Using the Direct Method to Prepare the Statement of Cash Flows to open the resource.
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Saylor Academy © 2010-2025 except as otherwise noted. Excluding course final exams, content authored by Saylor Academy is available under a Creative Commons Attribution 3.0 Unported license. Third-party materials are the copyright of their respective owners and shared under various licenses. See detailed licensing information. Saylor Academy®, Saylor.org®, and Harnessing Technology to Make Education Free® are trade names of the Constitution Foundation, a 501(c)(3) organization through which our educational activities are conducted.