Question

Sage Hill Company's accounts receivable arising from sales to customers amounted to $138000 and $121000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $526000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is:
$509000.
$526000.
$543000.
$647000.

Answer 1

Answer:

Option C - $543,000 is the correct option.

Explanation:

Using the direct method:

Cash from operating activities = Revenue + Decrease in trade receiables

= $526,000 + ($138,000 - $121,000) = $526,000 + $17,000 = $543,000

So this is the amount that would be reported in Statement of cash flow under operating activities.