Sales reported on the income statement totaled $750,000. The beginning balance in accounts receivable was $70,000. The ending balance in accounts receivable was $80,000. Under the direct method of determining the net cash provided by operating activities on the statement of cash flows, sales adjusted to a cash basis are:
A)$760,000
B)$740,000
C)$680,000
D)$830,000

Question

Quizplus · Accepted Answer

The direct method adjusts sales to a cash basis by subtracting the increase in accounts receivable and adding the decrease in accounts receivable. Therefore, sales adjusted to a cash basis would be: 
$750,000 - ($80,000 - $70,000) = $740,000.

Sales Reported on the Income Statement Totaled $750,000