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Alex is a calendar-year sole proprietor.He began business on December 1,this year.He uses the accrual method of accounting.Alex had the following collections in December: • Collected $7,000 in December,from clients who paid cash for services to be performed next year.
• Collected $5,000 in December,for services performed during December; deposited in an operating account on December 31,this year.
• Collected $12,000 in December; on accounts receivable for services performed in December; deposited in operating account on January 2,next year.
What is the amount Alex must include in his income for December?
Statement of Cash Flows
A financial document that provides detailed information about a company's cash inflows and outflows over a specific period.
Direct Method
A approach used in cash flow statement preparation that lists all major operating cash receipts and payments for the period, directly showing sources and uses of cash.
Investing Activities
Transactions involving the acquisition or disposal of long-term assets and investments, as part of a company's cash flow statement.
Income from Operations
the profit generated from a company’s core business operations, excluding income from investments, taxes, and extraordinary items.
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