CFA Practice Question

There are 534 practice questions for this study session.

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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