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.

Question

Quizplus · Accepted Answer

On a statement of cash flows prepared using the direct method, cash from customers would be calculated as sales minus any decrease in accounts receivable. This is because any decrease in accounts receivable would represent an increase in cash received from customers (as they are paying off their outstanding balances). An increase in accounts receivable, on the other hand, would represent a decrease in cash received from customers (as they are not paying off their outstanding balances as quickly). Therefore, choice C - decrease in accounts receivable - is the best answer.

On a Statement of Cash Flows Prepared Using the Direct