BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Income statement Statement of cash flowsRevenue +$100 inflow from investing
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Income statement Statement of cash flowsno impact inflow from operations
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Income statement Statement of cash flowsRevenue-$100 inflow from operations
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Income statement Statement of cash flowsno impact inflow from financing
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Detailed explanation-1: -Accounts receivable is an asset account and is the money customers owe you for extending them credit on previous sales. When the company receives cash from an accounts receivable, your cash account increases by the amount of the collection and the accounts receivable account decreases by the same amount.
Detailed explanation-2: -Accounts receivable collections is a revenue stream for companies that falls under the category of operating activities because it aims to improve the cash flow for a company. AR collections is designed to make more money from its current customers by collecting money they owe now.
Detailed explanation-3: -Which of the following shows how collecting cash from accounts receivable will affect a company’s financial statements? Collecting receivables results in an increase in one asset account (cash) and a decrease in another asset account (accounts receivable) leaving total assets unaffected.
Detailed explanation-4: -Which of the following shows how paying cash to purchase supplies will affect a company’s financial statements? Paying cash to purchase supplies is an asset exchange transaction. One asset (cash) decreases and another asset (supplies) increases. Total assets is not affected.