Avatar Company uses the direct method to prepare its statement of cash flows. Refer to the following information reported for the year 2015: 1)Sales Revenue, $515,000
2)Accounts Receivable, beginning balance, $92,000
"3)Accounts Receivable, ending balance, $57,000
In the operating activities section of the statement of cash flows, what amount will be shown for collections from customers?"
A)$550,000
B)$458,000
C)$149,000
D)$366,000

Question

Quizplus · Accepted Answer

The collections from customers are calculated by adjusting the sales revenue for the change in accounts receivable. The formula is: Collections = Sales Revenue + Beginning Accounts Receivable - Ending Accounts Receivable. Thus, $515,000 + $92,000 - $57,000 = $550,000.

Avatar Company Uses the Direct Method to Prepare Its Statement