In the Indirect Method, an Increase in Trade Receivables Is

question 41

Multiple Choice

In the indirect method, an increase in trade receivables is reported on the statement of cash flows as:

• A) an increase to sales.
• B) a decrease to sales.
• C) an increase to cash.
• D) a decrease to cash.

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Definitions:

Accounts Receivable

The money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Cash Management

The process of collecting, managing, and investing a company's cash flow efficiently.

Principles

Fundamental concepts or beliefs that drive decision-making processes and practices within various disciplines, including ethical values in business or foundational laws in science.

Days' Sales Uncollected

A financial metric indicating the average number of days it takes a company to collect payment after a sale is made.