Accounts Receivable Arising from Sales to Customers Amounted to ¥800,000

question 171

Multiple Choice

Accounts receivable arising from sales to customers amounted to ¥800,000 and ¥700,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was ¥2,600,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is

• A) ¥2,600,000.
• B) ¥2,700,000.
• C) ¥3,300,000.
• D) ¥2,500,000.

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Definitions:

FOB Shipping Point

A term used in shipping agreements indicating that the buyer is responsible for the goods once they leave the seller's premises.

Prepaid Freight

Costs paid in advance for the transportation of goods, which are typically recorded as a prepaid expense until the goods are delivered.

Merchandise Return

The process of a customer returning previously purchased merchandise back to the business, often leading to a refund or store credit.

Trade Discount

A reduction in the list price granted by a seller to a buyer based on the volume of the transaction or the buyer's trade status.