Accounts Receivable from Sales to Customers Amounted to $40,000 and $32,000

question 18

Multiple Choice

Accounts receivable from sales to customers amounted to $40,000 and $32,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other adjustments, the net cash flows from operating activities to be reported on the statement of cash flows using the indirect method is

• A) $118,000
• B) $110,000
• C) $102,000
• D) $150,000

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Definitions:

Weighted Average Cost

The total cost of goods available for sale divided by the number of goods available for sale, giving each item a weight proportional to its cost.

Cost of Equity

The return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate them for the risk of investing in the company.

Pre-tax Cost

The cost of an investment or expense before the application of taxes, representing the gross expense.

Market Price

The rate at present for the purchase or sale of a service or asset.