Assume a Company Uses the Direct Method to Prepare Its

question 94

Multiple Choice

Assume a company uses the direct method to prepare its statement of cash flows. If the company's accounts receivable increase during the accounting period, the change in accounts receivable
Is:

• A) added to the change in the cash account to calculate cash collected from customers.
• B) subtracted from sales revenue to calculate the cash collected from customers.
• C) added to sales revenue to calculate the cash collected from customers.
• D) subtracted from the change in the cash account to calculate cash collected from customers.

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Definitions:

Excise Tax

A tax levied on specific goods, services, or transactions, often aimed at discouraging their use or raising revenue.

Relative Burden

A measure of the comparative impact or weight of a specific demand, typically financial, on different entities or groups.

Elastic Supply

Refers to a situation where the quantity of a good supplied by producers changes significantly in response to a change in price.

Elasticities

A measure in economics that shows how much the quantity demanded or supplied of a good responds to changes in price, income, or other factors.