Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $280,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is
A) $280,000.
B) $290,000.
C) $350,000.
D) $270,000.

Question

Quizplus · Accepted Answer

The decrease in accounts receivable ($80,000 - $70,000 = $10,000) indicates that cash collected from customers was $10,000 more than the sales revenue recognized. Therefore, the cash flows from operating activities would be $280,000 (income) + $10,000 (decrease in accounts receivable) = $290,000.

Accounts Receivable Arising from Sales to Customers Amounted to $80,000