The direct method is preferable because income and expenses are measured using the cash method of accounting.

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The direct method is preferable for some because it provides a detailed view of cash flows from operating activities by listing major classes of gross cash receipts and payments. However, it does not inherently measure income and expenses using the cash method of accounting; it simply presents cash flows in a straightforward manner. The accrual method of accounting is typically used to measure income and expenses in the preparation of the income statement.

The Direct Method Is Preferable Because Income and Expenses Are