A company uses the direct method to prepare the statement of cash flows.It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory
Which of the following is correct about accounts receivable in the operating activities category of the cash flow statement?
A)The increase of $15,000 will be subtracted from net income.
B)The increase of $15,000 will be subtracted from sales to determine cash received from customers.
C)The increase of $15,000 will be added to sales to determine cash received from customers.
D)The increase of $15,000 will be added to net income.

Question

A company uses the direct method to prepare the statement of cash flows.It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory
Which of the following is correct about accounts receivable in the operating activities category of the cash flow statement?
A)The increase of $15,000 will be subtracted from net income. 
B)The increase of $15,000 will be subtracted from sales to determine cash received from customers. 
C)The increase of $15,000 will be added to sales to determine cash received from customers. 
D)The increase of $15,000 will be added to net income.

Quizplus · Accepted Answer

The Answer of A company uses the direct method to prepare the statement of cash flows.It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory
Which of the following is correct about accounts receivable in the operating activities category of the cash flow statement?
A)The increase of $15,000 will be subtracted from net income. 
B)The increase of $15,000 will be subtracted from sales to determine cash received from customers. 
C)The increase of $15,000 will be added to sales to determine cash received from customers. 
D)The increase of $15,000 will be added to net income.

A Company Uses the Direct Method to Prepare the Statement