Using the Direct Method We Adjust the Items on the Income

question 145

True/False

Using the direct method we adjust the items on the income statement to directly show the cash inflows and outflows from operations.

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Definitions:

Revenue

The total amount of money received by a company for goods sold or services provided during a certain period.

Record Payments

The process of documenting all money transfers made to settle debts or for purchases in the accounting records of a company.

Perpetual Inventory Method

An accounting method for maintaining continuous records of inventory balances, with updates made for each purchase and sale transaction.

Merchandise Inventory

Products held by a business for the purpose of sale to customers, a key asset in retail and wholesale operations.