Last year Lawn Corporation reported sales of $120,000 on its income statement. During the year, accounts receivable increased by $13,000 and accounts payable increased by $18,000. The company uses the direct method to determine the net cash provided by (used in) operating activities on the statement of cash flows. The sales revenue adjusted to a cash basis for the year would be:

Question

Quizplus · Accepted Answer

To adjust sales revenue to a cash basis, subtract the increase in accounts receivable ($13,000) from the reported sales ($120,000), resulting in $107,000. The increase in accounts payable does not affect cash sales.

Last Year Lawn Corporation Reported Sales of $120,000 on Its