Accounts receivable arising from sales to customers amounted to $86000 and $77000 at the beginning and end of the year respectively. Income reported on the income statement for the year was $290000. Exclusive of the effect of other adjustments the cash flows from operating activities to be reported on the statement of cash flows is
A) $290000.
B) $299000.
C) $213000.
D) $280000.

Question

Quizplus · Accepted Answer

The correct cash flow from operating activities is calculated by adjusting the income reported on the income statement for the change in accounts receivable. The decrease in accounts receivable ($86000 - $77000 = $9000) indicates that more cash was received than the income reported. Therefore, add this decrease to the reported income: $290000 + $9000 = $299000.

Accounts Receivable Arising from Sales to Customers Amounted to $86000