Asked by SIMNIKIWE MASIKITI on Jun 14, 2024
Verified
Sales reported on the income statement were $372,000. The accounts receivable balance declined $4,500 over the year. The amount of cash received from customers was $367,500.
Accounts Receivable
Amounts owed by customers to a company for goods or services provided on credit.
Income Statement
An account that tracks a business's financial transactions, including income and expenditures over a designated timeframe, leading to a final profit or loss.
- Assess cash revenues generated from sales and expenditures on goods, operational fees, and taxes on profits through the adoption of the direct method.
Verified Answer
EA
Elisa AfiouniJun 15, 2024
Final Answer :
False
Explanation :
The cash received from customers is calculated by adjusting the sales reported on the income statement for the change in accounts receivable. If sales were $372,000 and accounts receivable declined by $4,500, it means that cash received is actually $372,000 + $4,500 = $376,500, not $367,500.
Learning Objectives
- Assess cash revenues generated from sales and expenditures on goods, operational fees, and taxes on profits through the adoption of the direct method.