Cash Received from Customers (Direct Method Statement of Cash Flows)

This video shows how to calculate the cash received from customers for the operating section of the Statement of Cash Flows when a company uses the direct method.

You obtain the cash received from customers by converting the sales revenue from the Income Statement to a cash-basis. This is done using the following formula:

Cash Received from Customers = Sales Revenue + Decrease in Accounts Receivable - Increase in Accounts Receivable + Increase in Unearned Revenue - Decrease in Unearned Revenue—
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