On a Statement of Cash Flows Prepared Using the Direct

question 5

Multiple Choice

On a statement of cash flows prepared using the direct method,cash from customers would be sales plus a(n)

• A) decrease in accounts payable.
• B) increase in accounts payable.
• C) decrease in accounts receivable.
• D) increase in accounts receivable.

---

Definitions:

Useful Life

The estimated duration an asset is expected to be economically usable, with normal wear and tear.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, representing the asset's wear and tear, deterioration, or obsolescence.

Units-of-Activity Method

A depreciation technique that calculates the depreciation of an asset based on its usage, activity, or units produced instead of time.

Depreciation Rates

Percentages or methods used to systematically reduce the book value of a tangible asset over its useful life.