Qtopia Company Uses the Direct Method to Prepare Its Cash

question 1

True/False

Qtopia Company uses the direct method to prepare its cash flow statement.It has reported sales revenue of $100 000 on its income statement for the year 2016.If the balance in accounts receivable has gone up by $4 000 during the year,then $4 000 will have to be added to $100 000 to calculate collections from customers.

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Definitions:

Net Income

The total profit or loss of a company after all expenses, including taxes and interest, have been deducted from total revenue.

December

The twelfth and final month of the year in the Gregorian calendar, frequently associated with end-of-year summaries and holiday seasons.

Merchandise Purchases

The total cost of goods bought for resale during an accounting period.

Raw Materials

The basic materials and components required in the manufacturing process to produce finished goods.