In one month, a company receives $250,000 in payments toward customer credit accounts and extends $180,000 in new credit for sales. What amount
is recorded in the statement of cash flow?
A. $250,000
B. $180,000
C. $320,000
D. $70,000

A. $250,000

Explanation:

The cash flow statements summarize cash and cash equivalents entering and living the business. A cash flow statement operates on cash accounting basis. It means transactions are recorded when cash changes hands, either inwards or outwards.

In this transaction, only $250,000 will be recorded on the cash flow statement as it is a cash inflow. The credit sales transactions will not be recorded. It is not a cash transaction.

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