A company that had a $500 decrease in accounts receivable during a period would do which of the following on its statement of cash flows prepared using the indirect method?
A)Add the $500 to net income in order to arrive at net cash provided by operating activities.
B)Subtract the $500 from net income in order to arrive at net cash provided by operating activities.
C)Add the $500 to the net cash provided by investing activities.
D)Add the $500 to the net cash provided by financing activities.

Question

Quizplus · Accepted Answer

A decrease in accounts receivable indicates that cash was collected, so $500 is added to net income to adjust for the cash inflow in the operating activities section.

A Company That Had a $500 Decrease in Accounts Receivable