Accounts receivable resulting from sales to customers amounted to $40,000 and $31,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is
A) $120,000.
B) $129,000.
C) $151,000.
D) $111,000.

Question

Quizplus · Accepted Answer

The decrease in accounts receivable ($40,000 - $31,000 = $9,000) indicates that cash collected from customers was $9,000 more than the sales revenue recognized. Therefore, the cash flows from operating activities would be $120,000 (income) + $9,000 (decrease in accounts receivable) = $129,000.

Accounts Receivable Resulting from Sales to Customers Amounted to $40,000