CFA Practice Question

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CFA Practice Question

Which of the following would represent an inflow of cash in determining cash flow from operating activities using the direct method?

A. A decrease in accounts receivable
B. An increase in inventory
C. A decrease in accounts payable
D. Depreciation
Correct Answer: A

A decrease in accounts receivable represents a collection of accounts receivable, which is an inflow of cash from an operating activity.

User Contributed Comments 4

User Comment
choas69 add: decrease in CA
less: increase in CA
add: increase in CL
less: decrease in CL
choas69 CA inverse relationship
CL direct relationship
mlaique Why not depreciation?
lndcobra I would argue none, as a decrease in accounts receivable could mean writing off a loss, therefore, no cash transaction! But out of the 4, it is the only "inflow"
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