Question

Marin Company's accounts receivable arising from sales to customers amounted to $131000 and $114000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $498000.
Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is:

a) $498000. b) $612000. c) $481000. d) $515000.

Answer 1

Answer:

d) $515,000

Explanation:

Given:

Accounts Receivable Beginning Balance = $131,000

Accounts Receivable Ending Balance = $114,000

Decrease in Accounts Receivables = $17,000

We take the difference between beginning and ending Balance of Accounts Receivables. If there is a decrease in Accounts Receivables we add that amount in Income reported on Income Statement for that year. So,

$498,000 + $17,000

= $515,000

Hence, the Cash Flow from Operating Activities would be $515,000, exclusive of the other adjustments.