Assume That the Direct Method Is Used to Prepare the Operating

question 125

Multiple Choice

Assume that the direct method is used to prepare the operating activities section of the statement of cash flows.Why is a decrease in Accounts Receivable decrease added to sales revenue when computing cash collected from customers?

• A)There were more cash sales than credit sales during the year.
• B)There were more collections of Accounts Receivable than sales on account during the year.
• C)There were more credit sales than cash sales during the year.
• D)There were more sales on account than collections of Accounts Receivable during the year.

---

Definitions:

Repetitive

Involves actions or events occurring in a regular and predictable pattern.

Unpredictable

Not able to be predicted or foreseen; capable of happening without any prior indication.

Core Competencies

Core Competencies are the unique strengths and abilities that a company or an individual possesses, providing distinct competitive advantages over opponents or the unique propositions one offers in the marketplace.

Payroll Administration

Payroll administration encompasses the tasks involved in managing the compensation of employees, including calculating wages, withholding taxes, and ensuring compliance with labor laws.