The direct method is easier for firms to implement because it relies exclusively on data already available in the accrual accounts.

Question

The direct method is easier for firms to implement because it relies exclu­sively on data already available in the accrual accounts.

Quizplus · Accepted Answer

The direct method requires detailed tracking of cash receipts and payments, which can be more labor-intensive and complex compared to using the indirect method that adjusts net income for non-cash transactions and changes in balance sheet accounts.

The Direct Method Is Easier for Firms to Implement Because