When Preparing the Operating Activities Section of the Statement of Cash

question 237

True/False

When preparing the operating activities section of the statement of cash flows using the indirect method, a decrease in accounts receivable is subtracted from net income.

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Definitions:

Financial Statements

Papers that summarize a corporation's financial status, featuring the balance sheet, income statement, and cash flow statement.

Common Shares

Equity securities that represent ownership in a corporation, providing voting rights and a portion of profits through dividends.

Generally Accepted Accounting Principles

The common set of accounting principles, standards, and procedures that companies use to compile their financial statements in the U.S.

Comparability Problems

Issues that arise when attempting to compare financial information due to differences in accounting policies or standards.