Sales for the year were $600,000. Accounts receivable were $100,000 and $80,000 at the beginning and end of the year. Cash received from customers to be reported on the cash flow statement using the direct method is
A) $700,000
B) $600,000
C) $580,000
D) $620,000

Question

Quizplus · Accepted Answer

The cash received from customers is calculated by adjusting sales for the change in accounts receivable. The accounts receivable decreased by $20,000 ($100,000 - $80,000), indicating that more cash was collected than sales made. Therefore, cash received = $600,000 (sales) + $20,000 (decrease in accounts receivable) = $620,000.

Sales for the Year Were $600,000