A Company Uses the Direct Method to Prepare the Statement

question 136

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 $115,000 will be subtracted from net income.
• B)The increase of $115,000 will be subtracted from sales to determine cash received from customers.
• C)The increase of $115,000 will be added to sales to determine cash received from customers.
• D)The increase of $115,000 will be added to net income.

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