Question 1
Multiple ChoiceBelow is selected financial information from DeltaVista Inc.'s comparative income statement and balance sheet:
Selected Income Statement Data for the Year Ended 31 December ($ thousands)
2024 | 2023
Revenue: 120,000 | 110,000
Cost of goods sold: 52,000 | 50,000
Depreciation: 5,000 | 4,800
Net Income: 14,500 | 7,200
Selected Balance Sheet Data as of 31 December ($ thousands)
2024 | 2023
Current Assets
Accounts receivable: 30,000 | 18,000
Inventories: 17,000 | 14,000
Cash and equivalents: 28,000 | 23,000
Current Liabilities
Accounts payable: 18,000 | 17,500
Accrued expenses: 9,500 | 8,500
The cash collected from customers during 2024 is closest to:
Explanation
To calculate cash collected from customers, start with revenue and subtract the increase in accounts receivable:
Revenue = $120,000
Change in accounts receivable = 30,000 – 18,000 = 12,000 increase
Cash collected = Revenue – Increase in A/R
= $120,000 – $12,000
= $108,000
The increase in accounts receivable represents sales made on credit that have not yet been collected in cash. Subtracting that increase gives a more accurate picture of actual cash received from customers.