Accounts receivable arising from sales to customers amounted to ¥800,000 and ¥700,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was ¥2,600,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is
A) ¥2,600,000.
B) ¥2,700,000.
C) ¥3,300,000.
D) ¥2,500,000.

Question

Quizplus · Accepted Answer

The decrease in accounts receivable (¥800,000 - ¥700,000 = ¥100,000) indicates that cash collected from customers was ¥100,000 more than the revenue recognized. Therefore, the cash flows from operating activities would be ¥2,600,000 + ¥100,000 = ¥2,700,000.

Accounts Receivable Arising from Sales to Customers Amounted to ¥800,000