(Appendix) When preparing a schedule for the calculation of cash generated from operating activities under the direct method, a decrease in Accounts Receivable is
A) added to net sales.
B) subtracted from net sales.
C) added to operating expenses.
D) subtracted from cost of goods sold.

Question

Quizplus · Accepted Answer

A decrease in Accounts Receivable indicates that cash has been collected from customers, so it is added to net sales to calculate cash receipts from customers.

(Appendix) When Preparing a Schedule for the Calculation of Cash