When preparing the statement of cash flows under the direct method,an appropriate procedure would be to
A)subtract a gain from the sale of a fixed asset to net income.
B)subtract an increase in accounts receivable from sales when calculating cash received from customers.
C)subtract depreciation expense from net income.
D)add a loss from the sale of a fixed asset to net income.
E)add depreciation expense to net income.

Question

Quizplus · Accepted Answer

When preparing the statement of cash flows under the direct method, an appropriate procedure would be to subtract an increase in accounts receivable from sales when calculating cash received from customers. This helps in determining the actual cash inflow from sales during the period, rather than just the revenue earned from sales as reported in the income statement.

When Preparing the Statement of Cash Flows Under the Direct