Question

The direct method presents a summary of all operating transactions that result in either a debit or credit to blank . (enter one word per blank.) multiple choice question.

a. noncurrent assets
b. cash net
c. income retained
d. earnings

Answer 1

The direct method presents a summary of all operating transactions that result in either a debit or credit to cash net. Therefore, the correct option is B.

Step-by-step explanation:

The direct method presents a summary of all operating transactions that result in either a debit or credit to cash net.

For example, when a company receives cash from sales, it is recorded as a debit to cash and a credit to sales revenue. Similarly, when a company pays cash for expenses, it is recorded as a debit to the respective expense account and a credit to cash.

In summary, the direct method summarizes transactions that impact the cash flow of a business.