CAF-1 · Chapter 14 · Question 6 of 15
Under the direct method of reporting operating cash flows, how is 'cash received from customers' determined?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) By reporting major classes of gross cash receipts, typically calculated by adjusting revenue for the change in trade receivables.
Explanation
The direct method discloses major classes of gross cash receipts. Cash received from customers is found by adjusting sales revenue for changes in trade receivables.
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