Under the indirect method, if there is an Accounts Receivable decrease of $300,000, this would be subtracted from Sales.

Question

Quizplus · Accepted Answer

Under the indirect method of preparing the cash flow statement, changes in accounts receivable are adjusted in the operating activities section, but not by subtracting from sales. Instead, a decrease in accounts receivable would be added to net income to reflect that cash collections from customers were higher than sales recognized on an accrual basis.

Under the Indirect Method, If There Is an Accounts Receivable