A Company Uses the Direct Method to Prepare the Statement

question 22

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
Which of the following is correct about the accounts receivable in the operating activities category in the statement of cash flows?

• 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.

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Definitions:

Web-Based Technologies

Internet-enabled tools and systems that allow users to perform tasks, exchange information, and access services online.

Social Technologies

Digital tools and platforms that enable interaction and collaboration among users.

Sales Process

A series of steps that a sales team takes to move a customer from potential prospect to buyer, often including stages such as outreach, discovery, negotiation, and closing.

Relationship Selling

A sales approach that involves building and maintaining customer trust over a long period of time.