CFA Level I · CFA Level I Exam · Analyzing Statements of Cash Flows I
Marlow Ltd reported sales of 900,000. Accounts receivable rose from 120,000 to 150,000 during the year. Cash collected from customers is closest to:
Cash collected from customers is about 870,000. Sales of 900,000 are reduced by the 30,000 increase in receivables, because part of the sales was not yet collected in cash. Adding the increase instead would wrongly give 930,000.
- A870,000Correct
- B930,000
- C1,050,000
Explanation
Cash collected = sales - increase in receivables = 900,000 - 30,000 = 870,000. Check: opening 120,000 + sales 900,000 - collections 870,000 = 150,000 closing. Adding the increase (930,000) is the sign error.
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