Question

Accounts receivable arising from sales to customers amounted to $85,000 and $75,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $285,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is:____.

a. $275,000.
b. $445,000.
c. $285,000.
d. $295,000.

Answer 1

d. $295,000

Step-by-step explanation:

Calculation to determine what the cash flows from operating activities to be reported on the statement of cash flows is:

Using this formula

Cash flows from operating activities =Net income + Decrease in accounts receivable

Let plug in the formula

Cash flows from operating activities=$285,000+($85,000-$75,000)

Cash flows from operating activities=$285,000+$10,000

Cash flows from operating activities=$295,000

Therefore the cash flows from operating activities to be reported on the statement of cash flows is:$295,000