When preparing the operating activities section of the statement of cash flows under the direct method, an increase in accounts receivable is subtracted from sales.

Name: When preparing the operating activities section of the statement of cash flows under the direct method, an increase in accounts receivable is subtracted from sales.
Brand: Quizplus
Rating: 4.8 (38 reviews)

Question

Quizplus · Accepted Answer

An increase in accounts receivable indicates that not all sales were collected in cash, so it is subtracted from sales to calculate cash received from customers.

When Preparing the Operating Activities Section of the Statement of Cash