Georgia Corp How Will the Change in Accounts Receivable Be Shown on Cash

question 85

Multiple Choice

Georgia Corp.uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet: $\begin{array}{c}\text { Georgia Corp.}\\\text { Comparative Balance Sheet}\\\text { December 31,2019 and 2018}\\\begin{array}{|l|r|r|r|}\hline&2019&2018&\text { Increase/(Decrease) }\\\hline\text { Cash } & \$ 45,000 & \$ 27,000 & \$ 18,000 \\\hline \text { Accounts Receivable } & 48,000 & 45,000 & 3,000 \\\hline \text { Merchandise Inventory } & \underline{180,000} & \underline{132,000} & \underline{48,000} \\\hline \text { Total Assets } & \$ 273,000 & \$ 204,000 & \$ 69,000\\\hline\end{array}\end{array}$
How will the change in Accounts Receivable be shown on the statement of cash flows?

• A) addition to net income under the operating activities section
• B) subtraction from net income under the operating activities section
• C) positive cash flow under the financing activities section
• D) negative cash flow under the investing activities section

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