Asked by Jayden Williams on Jun 03, 2024
Verified
Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method?
A) Credit sales.
B) Cash collections from customers.
C) Depreciation expense.
D) Cash received from the sale of a building.
E) Cash received from the sale of treasury stock.
Direct Method
An accounting method used to allocate service department costs directly to producing departments without any intermediate allocation.
Operating Activities
Operating activities involve the primary, day-to-day activities that a company engages in to generate revenue, such as sales, provision of services, and production.
Credit Sales
Sales made on credit, where the payment is received after the delivery of the goods or services.
- Comprehend the categorization of cash inflows and outflows within the direct approach for compiling a cash flow statement.
Verified Answer
Learning Objectives
- Comprehend the categorization of cash inflows and outflows within the direct approach for compiling a cash flow statement.
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