A company uses the indirect method to prepare the statement of cash flows.How will the adjustment to reflect the amount of cash received from customers be presented on the statement?

Question

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The adjustment to reflect the amount of cash received from customers will be presented as an increase or decrease in accounts receivable for the period, and will adjust net income in the operating activities section. This is because accounts receivable represents money owed to the company by its customers, and an increase in accounts receivable would mean that the company has made sales but has not yet received payment, which would result in a decrease in cash for the period. Therefore, this adjustment is necessary to reconcile net income to the actual cash received from customers during the period.

A Company Uses the Indirect Method to Prepare the Statement