When Using the Indirect Method to Complete the Cash Flows

question 113

Multiple Choice

When using the indirect method to complete the cash flows from operating activities section, what is the proper treatment for an increase in the Accounts Receivable balance?

• A)Add the increase to net income
• B)Add the increase to cash collections from customers
• C)Deduct the increase from net income
• D)Add the increase to cash payments to suppliers

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Definitions:

Promotional Incentives

Rewards or benefits offered to stimulate interest or action, especially in the context of marketing or sales.

Flexible Work Schedule

An employment timetable that allows variation in work hours, often accommodating personal needs.

Performance Review

A formal assessment in which an employee’s work performance is evaluated, typically by their supervisor, discussing both strengths and areas for improvement.

Supervisor

An individual in a position of authority who oversees and directs the work of employees or subordinates.