Question

Accounts receivable arising from sales to customers amounted to $40,000 and $55,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $180,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is _________.

Answer 1

$165,000

Step-by-step explanation:

The computation of the cash flows from operating activities is shown below:

Cash flow from operating activities

Net income reported for the year = $180,000

Less: Increase in account receivable -$15,000 ($40,000 - $55,000)

Cash flow provided by operating activities $165,000

Since there is a $15,000 increase in account receivable and the same is deducted from net income so that the correct amount could arrive