A Company Uses the Direct Method to Prepare the Statement

A company uses the direct method to prepare the statement of cash flows.It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory
Which of the following is correct about accounts receivable in the operating activities category of the cash flow statement?

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.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free