Using the direct method, cash received from customers is calculated as sales:
A)Plus an increase in allowance for uncollectible accounts.
B)Minus an increase in allowance for uncollectible accounts.
C)Plus an increase in accounts receivable.
D)Plus a decrease in accounts receivable.

Question

Quizplus · Accepted Answer

Cash received from customers is calculated by adjusting sales for changes in accounts receivable. A decrease in accounts receivable indicates that more cash was collected than sales made on credit, so it is added to sales to determine cash received.

Using the Direct Method, Cash Received from Customers Is Calculated