A Company Uses the Direct Method to Prepare the Statement

question 76

Multiple Choice

A company uses the direct method to prepare the statement of cash flow computes the amount of cash it receives from customers as

• A)cost of goods sold plus ending inventory minus beginning inventory.
• B)cost of goods sold minus ending inventory plus beginning inventory.
• C)sales revenue plus the decrease (or minus the increase)in accounts receivable.
• D)sales revenue minus the decrease (or plus the increase)in accounts receivable.

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Definitions:

Restatement of the Law

A set of treatises on legal subjects that seek to inform judges and lawyers about general principles of common law.

American Law Institute

An organization that produces scholarly work to clarify, modernize, and otherwise improve the law, including issuing Restatements of the Law.

Binding Contract

An agreement between two or more parties that is legally enforceable in a court of law.

Accepts Delivery

Refers to the act of receiving goods from a seller or transporter, acknowledging that the delivery meets the terms of the agreement.