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Good morning Mr John..I am so confused about how you solved the cash figure received from customers for cash flows from operating activities..
You just put whole revenue figure, only part of which could be paid by cash, in total receivables t-account…
We put in that receivables t account only figure from total of receivable journal and total of receivables in cash receipts book…
Thats why I think at first we need to know how much of that revenue is paid by cash?
I mean we just cant put whole revenue there…Thank you….Can you show me where I am thinking wrong?
We want the total cash received from customers – it doesn’t matter whether they were cash sales or sales on credit (obviously sales on credit will result in receiving cash – only some of those sales will still be owing at the end of the year).
The total cash received must always be equal to the total sales made as adjusted by any opening and closing receivables. Whether you use a t-account or not does not matter.
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