When using the direct method,which of the following should be reported as a source of cash from operating activities?
A)Credit sales
B)Depreciation expense
C)Collections from customers
D)Sale of a building
E)Sale of treasury shares

Question

Quizplus · Accepted Answer

Collections from customers are a source of cash from operating activities, as they represent cash inflows generated by the company's primary operations. Credit sales and depreciation expense are not direct sources of cash, as credit sales represent revenue recorded on credit and depreciation expense is a non-cash expense. The sale of a building and sale of treasury shares are sources of cash, but they would be reported as cash flows from investing and financing activities, respectively.

When Using the Direct Method,which of the Following Should Be