During Year 7, Frank Company Had a Net Increase in Accounts

question 31

Multiple Choice

During Year 7, Frank Company had a net increase in accounts receivable of $10,000.The T-account work sheet for preparing the statement of cash flows

• A)adds the increase in accounts receivable in deriving cash flow from operating activities.
• B)subtracts the increase in accounts receivable in deriving cash flow from operations.
• C)adds the increase in accounts receivable in deriving cash flow from financing activities.
• D)subtracts the increase in accounts receivable in deriving cash flow from financing activities.
• E)subtracts the increase in accounts receivable in deriving cash flow from investing activities.

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Definitions:

Shipment Contract

A sales agreement where the seller is obligated to send the goods to a specific destination, and the risk of loss passes to the buyer when the goods are delivered to the carrier.

Risk of Loss

The responsibility for the loss of goods during shipment, transfer, or at any time before the completion of a sale, typically determined by contract terms.

Shipment Contract

A type of sales contract where the seller is required to send the goods to the buyer, but the risk of loss passes when the goods are handed to the carrier.

Risk of Loss

A legal term referring to the responsibility for damage, destruction, or loss of goods, especially in the context of the sale or transport of those goods.