A Company Uses the Direct Method to Prepare the Statement

question 6

Multiple Choice

A company uses the direct method to prepare the statement of cash flows.It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory
Which of the following is correct about accounts receivable in the operating activities category of the cash flow statement?

• 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.