During the Year the Balance in the Accounts Receivable Account

question 83

Multiple Choice

During the year the balance in the Accounts Receivable account increased by $6,000. In order to adjust the company's net income to a cash basis using the direct method on the statement of cash flows, it would be necessary to:

• A) subtract the $6,000 from the sales revenue reported on the income statement.
• B) add the $6,000 to the sales revenue reported on the income statement.
• C) subtract the $6,000 from the cost of goods sold reported on the income statement.
• D) add the $6,000 to the cost of goods sold reported on the income statement.

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Definitions:

Laissez-Faire Capitalism

An economic system where private parties are free to conduct business transactions with minimal government intervention or regulation.

Division of Output

The allocation of the total quantity of goods or services produced among various consumers or markets.

Central Planning

An economic system where the government makes all decisions on the production and distribution of goods and services.

Freedom of Enterprise

the ability of individuals to start and manage their own businesses without undue restriction or interference.