Last year Snyder Company reported sales of $125,000 on its income statement. During the year, accounts receivable increased by $30,000 and accounts payable increased by $10,000. The company uses the direct method to determine the net cash flows from operating activities on the statement of cash flows. The sales revenue adjusted to a cash basis would be

Question

Quizplus · Accepted Answer

The direct method adjusts each line item from the income statement to a cash basis. To determine the adjusted sales revenue, we need to subtract the change in accounts receivable from the reported sales revenue.

Adjusted Sales Revenue = Sales Revenue -Increase in Accounts Receivable 
Adjusted Sales Revenue = $125,000 - $30,000 
Adjusted Sales Revenue = $95,000

Therefore, the correct answer is option C, $95,000.

Last Year Snyder Company Reported Sales of $125,000 on Its