All of the Following Would Appear on a Direct Method

question 75

Multiple Choice

All of the following would appear on a direct method statement of cash flows EXCEPT:

• A)cash purchase of equipment.
• B)net income.
• C)cash payments for interest and taxes.
• D)cash receipts from customers.

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Definitions:

Bank Reconciliation

The method of aligning and scrutinizing the numbers in financial records with the ones shown on a bank statement.

Aging of Accounts Receivable

A method used to categorize accounts receivable based on the length of time an invoice has been outstanding, helping to determine credit and collection policies.

Allowance for Doubtful Accounts

A contra asset account used to estimate the portion of a company's accounts receivable that may not be collected.

Bad Debt Expense

A projected expense reported by companies accounting for receivables that are expected to remain uncollected.