Under the direct method of preparing the statement of cash flows,which statement is CORRECT regarding the calculation of cash collected from interest revenue?
A)sales plus a decrease in interest receivable
B)interest revenue plus a decrease in interest receivable
C)interest revenue plus an increase in interest receivable
D)interest revenue less a decrease in interest receivable

Question

Quizplus · Accepted Answer

According to the direct method, the calculation of cash collected from interest revenue is done by adding interest revenue to a decrease in interest receivable. This is because a decrease in the interest receivable account represents the actual cash collected from interest revenue during the period.

Under the Direct Method of Preparing the Statement of Cash