The Following Items Were Obtained from the Financial Records

question 197

Multiple Choice

The following items were obtained from the financial records: How would the change in accounts receivable be reported in the operating activities section of the statement of cash flows under the indirect method?

• A)As an addition to sales.
• B)As a deduction from sales.
• C)As an addition to net income.
• D)As a deduction from net income.

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Definitions:

Direct Labor Hours

The total hours worked by employees directly involved in the production of goods or providing services.

Journal Entry

A record in accounting that notes the details of a financial transaction in a company’s financial systems.

Raw Materials

Basic materials that are used in the production process to manufacture goods, often transformed or converted into the finished product.

Journal Entry

A record in the books of account that represents a transaction and its effect on the accounts, typically including a debit and credit.