M Ltd had these transactions during the first month of the new accounting period: $\bullet$Sold merchandise for $12 000 on credit; its cost was $5 000 and it was purchased and paid for last year
$\bullet$Collected $3 000 from an account receivable
$\bullet$Borrowed $10 000 from the bank
$\bullet$Paid dividends of $500
Using the above information, M Ltd would report net cash flow from operating activities for the new period as:
A) $2 500.
B) $3 000.
C) $8 000.
D) None of the above.

Question

Quizplus · Accepted Answer

The net cash flow from operating activities can be calculated as follows:

Cash inflows from operating activities: 
- Collection from accounts receivable: $3,000

Cash outflows from operating activities:
- Cost of goods sold: $5,000 
- Dividends paid: $500

Net cash flow from operating activities = $3,000 - $5,000 - $500 = $2,500

Therefore, the correct answer is B.

M Ltd Had These Transactions During the First Month of the New