Assume That the Direct Method Is Used to Prepare the Operating

question 79

Multiple Choice

Assume that the direct method is used to prepare the operating activities section of the statement of cash flows.Which related balance sheet account will explain the difference between revenues on the income statement and cash collected from customers?

• A)Inventory
• B)Accounts Payable
• C)Cost of Goods Sold
• D)Accounts Receivable

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Definitions:

Parent Ltd Indirect Interest

An ownership interest held by a parent company in a subsidiary through another subsidiary rather than directly.

Multiple Consolidation

The process of integrating financial statements from multiple subsidiaries into one aggregated set of financial statements for the parent company.

Ownership Interests

The rights and shares held by an entity or individual in another company, evidencing an ownership stake.