Under the Direct Method of Preparing the Statement of Cash

question 14

Multiple Choice

Under the direct method of preparing the statement of cash flows, which statement is CORRECT regarding the calculation of cash collected from interest revenue?

• A)Sales plus a decrease in interest receivable.
• B)Interest revenue plus a decrease in interest receivable.
• C)Interest revenue plus an increase in interest receivable.
• D)Interest revenue less a decrease in interest receivable.

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Definitions:

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Factory Overhead Cost

Indirect costs associated with manufacturing, such as maintenance, utilities, and salaries of supervisors, not directly tied to specific product units.

Construction Contractor

A business or individual that agrees to construct a building or to manage a construction project in accordance with specified parameters.

Performance Report

A document that evaluates the performance of a project, department, or employee against set goals or benchmarks.