Assume the direct method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Decrease in Accounts Receivable-indicate the effect on cash receipts from sales by choosing one of the following:
A) Add to Sales to arrive at cash receipts from sales.
B) Subtract from Sales to arrive at cash receipts from sales.
C) Not used to adjust Sales to arrive at cash receipts from sales.
Correct Answer:
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