When preparing a statement of cash flows under the indirect method, an increase in ending accounts receivable over beginning accounts receivable will result in an adjustment to net income in the operating activities section because
A. cash was increased since accounts receivable is a current asset.
B. the accounts receivable increase was a revenue included in net income, but it was not a source of cash.
C. the net increase in accounts receivable decreases net sales and represents an assumed use of cash.
D. all changes in noncash accounts must be disclosed on the cash flow statement.
Answer: B
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a. permits firms to report cash flow from operations using the direct or indirect method. b. prefers the direct method of reporting cash flow from operations over the indirect method. c. states that the direct method must show a reconciliation between net income and cash flow from operations either at the bottom of the statement of cash flows or in a separate note. d. includes all of the above. e. includes none of the above.
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A. Pepsi requires stores that carry Pepsi products to commit to minimum orders of 1,000 cases. B. Walmart negotiates a lower cost per bottle from Coke in exchange for premium shelf space in every Walmart store. C. Zevia Natural Diet Soda begins selling directly over the Internet. D. Coke and Pepsi submit bids to the owner of a football stadium for the exclusive sale of their products during games.