What Is the Impact on the Cash Flow Statement from a Decrease

question 171

Multiple Choice

What is the impact on the cash flow statement from a decrease in accounts receivable, assuming the indirect method is used?

• A) A decrease in the cash flow from operating activities
• B) An increase in the cash flow from operating activities
• C) An increase in the cash flow from financing activities
• D) None.A decrease in accounts receivable has an impact only if the direct method is used

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Definitions:

Present Values

The current value of a future amount of money or stream of cash flows given a specified rate of return.

Net Present Value

A financial metric that calculates the value of projected cash flows, discounted back to the present value.

Firm's Cost

The total expenses incurred by a company, including production, operation, and overhead costs.

Reinvestment Assumption

The presumption that cash flows received from an investment will be reinvested at a rate consistent with the investment's original rate of return.