The statement of cash flows of Bosley Corporation shows the amount of cash received from customers as $720,000.If net sales in Bosley Corporation's income statement are reported at $670,000 then:
A)Bosley's accounts receivable increased $50,000.
B)Bosley's Cash account decreased $50,000.
C)Bosley's accounts receivable decreased $50,000.
D)Bosley's accounts receivable are $50,000 at the end of the year.

Question

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The amount of cash received from customers is not equal to net sales as it includes cash collections from previous credit sales. Therefore, if cash received from customers is more than net sales, it means that some amount of cash has been received for sales made in previous periods. This indicates a decrease in accounts receivable as the company has received cash for its prior credit sales. Hence, Bosley's accounts receivable decreased $50,000.

The Statement of Cash Flows of Bosley Corporation Shows the Amount