In the indirect method, an increase in trade receivables is reported on the statement of cash ﬂows as:
A) an increase to cash.
B) a decrease to cash.
C) an increase to sales.
D) a decrease to sales.

Question

Quizplus · Accepted Answer

An increase in trade receivables indicates that the company sold goods or services on credit, which does not result in an immediate cash inflow. Therefore, it is reported as a decrease to cash in the cash flow statement when using the indirect method.

In the Indirect Method, an Increase in Trade Receivables Is