The balance sheet of Storage Solutions reports total assets of $300,000 and $350,000 at the beginning and end of the year,respectively.The cash return on assets for the year is 10%.What is Storage Solutions' net cash flows from operating activities for the year?
A)$25,000.
B)$30,000.
C)$32,500.

Question

Quizplus · Accepted Answer

The cash return on assets can be calculated as:
Cash return on assets = (Net cash flow from operating activities / Average total assets) x 100%
10% = (Net cash flow from operating activities / (300,000 + 350,000) / 2) x 100%
10% = (Net cash flow from operating activities / 325,000) x 100%
Net cash flow from operating activities = 0.1 x 325,000 = $32,500. Therefore, the correct answer is choice C.

The Balance Sheet of Storage Solutions Reports Total Assets of $300,000