Assume That the Direct Method Is Used to Prepare the Operating

question 125

Multiple Choice

Assume that the direct method is used to prepare the operating activities section of the statement of cash flows.Why is a decrease in Accounts Receivable decrease added to sales revenue when computing cash collected from customers?

• A)There were more cash sales than credit sales during the year.
• B)There were more collections of Accounts Receivable than sales on account during the year.
• C)There were more credit sales than cash sales during the year.
• D)There were more sales on account than collections of Accounts Receivable during the year.

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