Answer to Question #262072 in Management for ass

Question

purchase of goods paid cash 100,000

Answer 1

The direct approach converts each item on the income statement to a cash basis. For instance, assume that sales are specified at $100,000 on an actual basis. If accounts receivable are amplified by $5,000, cash gatherings from clients would be $95,000, premeditated as $100,000 – $5,000. The direct technique likewise changes all outstanding items on the income statement to a cash foundation.