A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its financial statements. *Relates solely to the acquisition of inventory
What will appear in the operating activities section related to accounts receivable?

Question

A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its financial statements.  *Relates solely to the acquisition of inventory
What will appear in the operating activities section related to accounts receivable?

Quizplus · Accepted Answer

The increase in accounts receivable will indicate that some of the sales have not been collected in cash, so it needs to be subtracted from sales to determine the cash received from customers. This adjustment will be made in the operating activities section of the statement of cash flows.

A Company Uses the Direct Method to Prepare the Statement