Question
Which of the following statements is correct concerning the preparation of the operating section of the statement of cash flows? A. The choice of method,
Which of the following statements is correct concerning the preparation of the operating section of the statement of cash flows?
A.
The choice of method, direct or indirect, changes the overall cash flow from operating activities reported on the statement.
B.
A net loss from the sale of a long-term asset is reported in the operating section as a use of cash.
C.
Assuming accounts payable includes only inventory purchases, the payments to suppliers will always equal the inventory purchases made during the period.
D.
Assuming all sales are made on account and there was a net decrease in accounts receivable during the period, the cash received from customers can be calculated by adding the net decrease to total sales for the period.
E.
Cash operating expenses, assuming they are paid when incurred, are calculated by adding noncash expenses to the total operating expenses reported on the income statement.
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