Assume a Company Uses the Direct Method to Prepare Its

question 185

Multiple Choice

Assume a company uses the direct method to prepare its statement of cash flows.If the company's Accounts Receivable increase during the accounting period,the change in Accounts Receivable is:

• A)added to the change in the Cash account to calculate cash collected from customers.
• B)subtracted from Sales Revenue to calculate the cash collected from customers.
• C)added to Sales Revenue to calculate the cash collected from customers.
• D)subtracted from the change in the Cash account to calculate cash collected from customers.

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Definitions:

Adjustment

The process of adapting or becoming better suited to a new condition or environment.

Inevitable Decline

The unavoidable decrease or deterioration in capability or condition over time.

Life Processes

The series of biological actions and phenomena that are common to all living organisms, such as growth, reproduction, and metabolism.

Terminally Ill

A terminally ill person is diagnosed with a disease that is inevitably leading to death, usually within a short period.