An Increase in Accounts Receivable of $1,000 Over the Course

question 208

Multiple Choice

An increase in accounts receivable of $1,000 over the course of a year would be shown on the company's statement of cash flows prepared under the indirect method as:

• A) an addition to net income of $1,000 in order to arrive at net cash provided by operating activities.
• B) a deduction from net income of $1,000 in order to arrive at net cash provided by operating activities.
• C) an addition of $1,000 under financing activities.
• D) a deduction of $1,000 under financing activities.

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Definitions:

Historical Cost

The original monetary value of an asset or liability as recorded at the time of acquisition, not adjusted for inflation or market changes.

Historical Rate of Exchange

The exchange rate that was in effect at the time of a past transaction.

Foreign Currency Units

Units of currency used in a country other than one's own, representing money from foreign nations.

Noncurrent Liability

Long-term financial obligations listed on a company’s balance sheet that are not due within the next 12 months.