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A Company Uses the Direct Method to Prepare the Statement

Question 55

Multiple Choice

A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its financial statements. 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 What will appear in the operating activities section related to accounts receivable? A) The increase of $15,000 will be subtracted from net income. B) The increase of $15,000 will be subtracted from sales to determine cash received from customers. C) The increase of $15,000 will be added to sales to determine cash received from customers. D) The increase of $15,000 will be added to net income. *Relates solely to the acquisition of inventory
What will appear in the operating activities section related to accounts receivable?


A) The increase of $15,000 will be subtracted from net income.
B) The increase of $15,000 will be subtracted from sales to determine cash received from customers.
C) The increase of $15,000 will be added to sales to determine cash received from customers.
D) The increase of $15,000 will be added to net income.

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