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22 August, 02:08

Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $280,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is a. $280,000. b. $290,000. c. $350,000. d. $270,000.

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  1. 22 August, 02:36
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    b. $290,000

    Explanation:

    The computation of the cash flows from operating activities to be reported on the statement of cash flows is shown below:

    = Net income reported on the income statement + decrease in account receivable

    where,

    Net income reported = $280,000

    And, the decrease in account receivable is $10,000 ($70,000 - $80,000)

    So, the cash flow from operating activities

    = $280,000 + $10,000

    = $290,000

    The decrease in account receivable implies that more cash is come so it would be added and the same is shown above
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