Accounts receivable arising from sales to customers amounted to $62,000 and $40,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $215,000. Exclusive of the effect of other adjustments, the cash inflows from operating activities to be reported on the statement of cash flows are
A) $213,000.
B) $215,000.
C) $193,000.
D) $237,000.

Question

Quizplus · Accepted Answer

The cash inflows from operating activities are calculated by adjusting the income reported on the income statement for changes in accounts receivable. The decrease in accounts receivable ($62,000 - $40,000 = $22,000) indicates that cash collected is higher than income reported. Therefore, add this decrease to the income reported to find the cash inflows from operating activities: $215,000 + $22,000 = $237,000.

Accounts Receivable Arising from Sales to Customers Amounted to $62,000