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5 April, 15:33

During Year 1, Pang Enterprises experienced the following events.

(1) Earned $4,000 of revenue on account.

(2) Collected $3,500 cash from accounts receivable.

The remainder of the receivable was collected in Year 2. Based on this information, the amount of accounts receivable, net income, and cash flow from operating activities appearing on the Year 2 financial statements is

A/Accounts Receivable Net Income Cash flow from Operating Activities

$500 $4,000 $500

B. Accounts Receivable Net Income Cash flow from Operating Activities

Zero zero $500

C. Accounts Receivable Net Income Cash flow from Operating Activities

Zero $500 $500

D. Accounts Receivable Net Income Cash flow from Operating Activities

$500 $500 $500

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Answers (1)
  1. 5 April, 16:29
    0
    Option "B" is the correct answer to the following statement.

    Explanation:

    At the end of the 2nd year, all the receivable is accumulated with Zero balance left. All revenues received in Year 1, so there is Zero revenue in 2nd year. Cash flow from Operating Activities = (Revenue Received - Decrease in current assets) = ($4,000 - $3,500 = $500) So, net cash inflows = $500

    Therefore, Option "B" is the correct answer.
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