The balance sheet of Technology World reports total assets of $800,000 and $900,000 at the beginning and end of the year,respectively.The cash return on assets for the year is 20%.What is Technology World's net operating cash flows for the year?
A)$4,500,000.
B)$170,000.
C)$4,250,000.

Question

Quizplus · Accepted Answer

The cash return on assets is calculated as:
Cash return on assets = Net operating cash flows / Average total assets
0.2 = Net operating cash flows / [(800,000 + 900,000)/2]
0.2 = Net operating cash flows / 850,000
Net operating cash flows = 0.2 x 850,000 = $170,000. Therefore, the correct choice is B.

The Balance Sheet of Technology World Reports Total Assets of $800,000