Under the indirect method of preparing a statement of cash flows,a decrease in the balance in the Accounts Receivable account during the year is:
A) added in the operating activities section
B) added in the investing activities section
C) subtracted in the operating activities section
D) subtracted in the financing activities section

Question

Quizplus · Accepted Answer

A decrease in Accounts Receivable indicates that cash was collected, so it is added back to net income in the operating activities section to adjust for non-cash revenue previously recognized.

Under the Indirect Method of Preparing a Statement of Cash