Accounts receivable from sales to customers amounted to $40,000 and $32,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is
A) $118,000.
B) $110,000.
C) $102,000.
D) $150,000.

Question

Quizplus · Accepted Answer

The decrease in accounts receivable ($40,000 - $32,000 = $8,000) indicates that cash collected from customers was $8,000 more than the sales revenue recognized. Therefore, the cash flows from operating activities would be $110,000 (income) + $8,000 (decrease in accounts receivable) = $118,000.

Accounts Receivable from Sales to Customers Amounted to $40,000 and $32,000