In the Statement of Cash Flows, an Increase in the Accounts

question 10

Multiple Choice

In the statement of cash flows, an increase in the accounts receivable balance from the beginning of the period to the end of the period would be:

• A)added to net income because this represents revenues that have been earned but not yet collected.
• B)subtracted from net income because this represents revenues that have not yet been earned or provided by investing activities.
• C)added to net income because this means that revenues earned and included within net income were less than the cash collected.
• D)subtracted from net income because this means that revenues earned and included within net income were more than the cash collected.

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Definitions:

Rectification

The correction of a mistake in an agreement that would have rendered the agreement impossible to perform.

Innocent Misrepresentation

A false statement made without knowledge of its falsehood, leading another to enter into a contract under mistaken beliefs, without intent to deceive.

Unilateral Mistake

An error made by one party in a contract, which may not automatically void the contract unless certain criteria are met.

Material Term

An essential clause or provision in a contract that significantly affects the rights and obligations of the parties involved.