Accounts receivable arising from sales to customers amounted to $35,000 and $40,000 at the beginning and end of 2022, respectively.Income reported on the income statement for the year was $223,000.Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is
A)$223,000.
B)$228,000.
C)$258,000.
D)$218,000.

Question

Quizplus · Accepted Answer

The increase in accounts receivable of $5,000 ($40,000 - $35,000) indicates that not all sales were collected in cash. Therefore, the cash flow from operating activities is $223,000 (income) - $5,000 (increase in receivables) = $218,000.

Accounts Receivable Arising from Sales to Customers Amounted to $35,000