Under the direct method of determining the net cash provided by operating activities on the statement of cash flows, an increase in accounts receivable would be added to sales revenue to convert revenue to a cash basis.

Question

Quizplus · Accepted Answer

Under the direct method, an increase in accounts receivable is subtracted from sales revenue to convert it to a cash basis, as it represents sales made on credit, not cash received.

Under the Direct Method of Determining the Net Cash Provided