A Company Uses the Direct Method to Prepare the Statement

question 55

Multiple Choice

A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its financial statements. *Relates solely to the acquisition of inventory
What will appear in the operating activities section related to accounts receivable?

• A)The increase of $15,000 will be subtracted from net income.
• B)The increase of $15,000 will be subtracted from sales to determine cash received from customers.
• C)The increase of $15,000 will be added to sales to determine cash received from customers.
• D)The increase of $15,000 will be added to net income.

---

Definitions:

Distinct Group

A set of individuals or entities that are clearly differentiated from others by specific characteristics, such as cultural, professional, or demographic traits.

Individual Transferable Quota (ITQ)

A regulatory tool used in fisheries management that limits the total catch and allocates specific quotas to individuals which can be traded.

Fishery Collapse

A dramatic decline in fish populations in a given area, often due to overfishing, pollution, or habitat destruction, leading to a loss of the fishery as a viable resource.

Harvesting Rates

describe the speed or volume at which natural resources are gathered or extracted, impacting sustainability and future availability.