A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its financial statements: *Relates solely to the acquisition of inventory
Which of the following is correct about the accounts receivable in the operating activities category in the statement of cash flows?
A)The increase of $115,000 will be subtracted from net income.
B)The increase of $115,000 will be subtracted from sales to determine cash received from customers.
C)The increase of $115,000 will be added to sales to determine cash received from customers.
D)The increase of $115,000 will be added to net income.

Question

A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its financial statements:  *Relates solely to the acquisition of inventory
Which of the following is correct about the accounts receivable in the operating activities category in the statement of cash flows?
A)The increase of $115,000 will be subtracted from net income. 
B)The increase of $115,000 will be subtracted from sales to determine cash received from customers. 
C)The increase of $115,000 will be added to sales to determine cash received from customers. 
D)The increase of $115,000 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 amounts on its financial statements:  *Relates solely to the acquisition of inventory
Which of the following is correct about the accounts receivable in the operating activities category in the statement of cash flows?
A)The increase of $115,000 will be subtracted from net income. 
B)The increase of $115,000 will be subtracted from sales to determine cash received from customers. 
C)The increase of $115,000 will be added to sales to determine cash received from customers. 
D)The increase of $115,000 will be added to net income.

A Company Uses the Direct Method to Prepare the Statement