Under the direct method of preparing the statement of cash flows,the cash collected from customers is determined for the operating activities section.

Question

Quizplus · Accepted Answer

This statement is correct. The direct method involves determining the cash inflows and outflows directly and separately for operating, investing and financing activities. Cash collected from customers is an example of an operating activity, and would be included in the operating activities section when using the direct method.

Under the Direct Method of Preparing the Statement of Cash