Which of the Following Items Does Not Appear in the Operating

question 19

Multiple Choice

Which of the following items does not appear in the operating activities section of the statement of cash flows prepared under the direct method?

• A)cash payments to suppliers
• B)cash collections from customers
• C)depreciation expense
• D)cash payments for interest

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Definitions:

Uncollectible Accounts

Debts owed to a company that are considered to be uncollectible and are thus written off as a bad debt expense.

Allowance Method

An accounting technique used to estimate uncollectable accounts receivable within a company's financial statements.

Bad Debt Expense

An accounting term representing the amount of revenue considered uncollectible from credit sales.

Allowance for Doubtful Accounts

A contra-asset account that reduces the total receivables balance to reflect the amount that is expected to be uncollectible.