Determine the Net Cash Flows for Periods 1 Through 3

question 43

Essay

Determine the net cash flows for periods 1 through 3 for a firm with the following transactions: $1,000 spent in period 1 and $2,000 spent in period 2 to produce goods to be sold in the following periods-sales of $2,000 in period 2 and $4,000 in period 3.One-half of all sales are in cash with the other half collected in the following period.

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Definitions:

Accounts Receivable

Outstanding payments from clients to a company for delivered services or products.

Direct Method

A way of reporting cash flows from operating activities in which major classes of gross cash receipts and payments are disclosed.

Cash Received

The actual amount of money received by a company during a specific period, including from sales, services, loans, investments, and other sources.

Accounts Receivable

Financial obligations of customers to a company for products or services already delivered but not settled.