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A Company Uses the Direct Method to Prepare the Statement

Question 110

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A company uses the direct method to prepare the statement of cash flows. It presents the following data on its financial statements: 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 $17,000 will be subtracted from net income. B) The increase of $17,000 will be subtracted from sales to determine cash received from customers. C) The increase of $17,000 will be added to sales to determine cash received from customers. D) The increase of $17,000 will be added to net income. *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 $17,000 will be subtracted from net income.
B) The increase of $17,000 will be subtracted from sales to determine cash received from customers.
C) The increase of $17,000 will be added to sales to determine cash received from customers.
D) The increase of $17,000 will be added to net income.

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