For Each Item Listed Below, Identify How It Will Be

question 190

Multiple Choice

For each item listed below, identify how it will be reported on the Statement of Cash Flows under the indirect method.
-Write-off of a customer's account receivable under the allowance method

• A)Operating activity
• B)Investing activity
• C)Financing activity
• D)Not reported separately on the cash flow statement

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Definitions:

Collection Time

The average period it takes for a business to receive payments owed by its customers for goods or services sold on credit.

Money Market Securities

Short-term financial instruments that are typically liquid and considered safe, such as Treasury bills and certificates of deposit.

Average Daily Float

The average amount of un-cleared or in-process checks and electronic payments that are recorded in a company’s accounting system at any given time.

Collection Delay

The time it takes for a business to receive payment after issuing an invoice or credit sale, impacting cash flow.