On a statement of cash flows prepared using the direct method,cash received from selling merchandise is considered a ________.
A) cash inflow from investing activities
B) cash inflow from operating activities
C) cash outflow from financing activities
D) cash outflow from investing activities

Question

Quizplus · Accepted Answer

Selling merchandise is a primary operating activity of a business, and therefore, the cash received from selling merchandise is considered a cash inflow from operating activities on the statement of cash flows prepared using the direct method. It is not a cash inflow from investing activities since it is not related to the acquisition or disposal of long-term assets, nor is it a cash outflow from financing activities since it is not related to the issuance or repayment of debt or equity.

On a Statement of Cash Flows Prepared Using the Direct