A Company Uses the Direct Method to Prepare the Statement

question 126

Multiple Choice

A company uses the direct method to prepare the statement of cash flows.It presents the following amounts on its financial statements. $$\begin{array} { | l | r | r | } \hline & \text { End of this year } & \text { End af priar year } \\\hline \text { Accounts receivable } & \$ 110,000 & \$ 100,000 \\\hline \text { Cost af gouds sald } & 560,000 & \\\hline \text { Sales revenue } & 830,000 & \\\hline \text { Accounts payable* } & 75,000 & 67,000 \\\hline \text { Inventary } & 86,000 & 105,000 \\\hline \text { Salary payable } & 13,000 & 10,000 \\\hline \text { Salary expense } & 49,000 & 45,000 \\\hline\end{array}$$ *Relates solely to the acquisition of inventory
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What will appear in the operating activities section related to accounts receivable?

• A)The increase of $10,000 will be subtracted from sales to determine cash received from customers.
• B)The increase of $10,000 will be subtracted from net income.
• C)The increase of $10,000 will be added to sales to determine cash received from customers.
• D)The increase of $10,000 will be added to net income.

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Definitions:

Solid Biomass

Organic, non-fossil material of biological origin, such as wood, crops, and algae, used as a fuel.

Carbon Dioxide Emissions

The release of CO2 into the atmosphere, primarily from burning fossil fuels for energy, which is a major driver of climate change.

Nondepletable

Resources or energy sources that cannot be exhausted, typically renewable energies like solar, wind, and hydroelectric power.

Geothermal Energy

Heat energy generated and stored within the Earth, harnessed by humans for heating and generating electricity with minimal environmental impact.