For each of the following items, indicate whether it would appear on a statement of cash flows prepared using the Direct method (a) or the Indirect method (b).
-Collections on accounts receivable
A)Direct
B)Indirect

Question

Quizplus · Accepted Answer

Collections on accounts receivable would appear on a statement of cash flows prepared using the Direct method because it represents cash inflows from customers. The Direct method presents individual cash inflows and outflows associated with operating activities, whereas the Indirect method starts with net income and adjusts for non-cash items and changes in working capital accounts.

For Each of the Following Items, Indicate Whether It Would