When Preparing a Statement of Cash Flows Under the Indirect

question 53

Multiple Choice

When preparing a statement of cash flows under the indirect method, an increase in ending accounts receivable over beginning accounts receivable will result in an adjustment to net income in the operating activities section because

• A)cash was increased since accounts receivable is a current asset
• B)the accounts receivable increase was a revenue included in net income, but it was not a source of cash
• C)the net increase in accounts receivable decreases net sales and represents an assumed use of cash
• D)all changes in noncash accounts must be disclosed on the cash flow statement

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