The Direct Method Shows the Reconciliation of Accrual Income to Cash

question 74

True/False

The direct method shows the reconciliation of accrual income to cash flows from operations,which is an advantage over the indirect method.

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Definitions:

Allowance Method

An accounting technique used to estimate uncollectible accounts receivable and recognize bad debt expense.

Adjusting Entry

Accounting entries recorded at the conclusion of a financial period for the purpose of assigning revenues and expenses to the time frame in which they were actually incurred.

Accounting Equation

The fundamental equation of double-entry bookkeeping: Assets = Liabilities + Equity.

Note Receivable

A written promise to pay a specified amount of money, with interest, by a certain date.