When the Current Assets of a Company Such as Trade

question 42

True/False

When the current assets of a company such as trade receivables or inventory increase during the year, the increase provides additional cash inflow from operating activities.

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Definitions:

Perpetual Inventory System

An accounting method where inventory levels are updated in real-time after every receipt or sale of items.

Physical Count

A method used in inventory management to ensure the actual number of physical goods matches the recorded inventory.

Inventory

The raw materials, work-in-progress goods, and finished products that a business holds for the purpose of sale in the ordinary course of business.

Single-Step Income Statement

A simplified income statement that calculates net income or loss by subtracting total expenses from total revenues in one step.