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Operating activitie1 - $663 decrease is added to sales per...

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Operating activities To prepare the operating activities section, certain accounts found in the current assets and current  liabilities section of the balance sheet are used to help identify the cash flows received and incurred  in generating net income. Cash collections from customers  This consists of sales made for cash (cash sales) and cash  collected from credit customers. The activity in the accounts receivable and sales accounts is used  to determine the cash collections from customers. Accounts receivable decreased by $663 because  the company received more cash from its customers than credit sales made by the company. The 
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Unformatted text preview: $663 decrease is added to sales per the income statement of $129,000 to determine the cash collections from customers reported in the cash flow statement of $129,663. If the accounts receivable balance had increased, the cash collected from customers would be determined by subtracting the increase in the accounts receivable balance from the sales balance because an increase in accounts receivable means your customers owe you the cash for their purchases (your sales). Accounts Receivable Beginning balance 19,230 Sales 129,000 129,663 Collections Ending balance 18,567...
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