Answer: €8 million.

The correct answer is **A (€8 million)**. The change in cash is calculated by adjusting net income for changes in accounts receivable and accounts payable: 1. **Net Income**: €3,000,000 2. **Adjustment for Accounts Receivable**: The increase in accounts receivable (€2,000,000) is subtracted from net income, as it represents accrued income not yet received in cash. 3. **Adjustment for Accounts Payable**: The decrease in accounts payable (€3,000,000) is also subtracted from net income, as it represents accrued expenses paid in cash. **Calculation**: - Change in cash = Net Income - Increase in Accounts Receivable - Decrease in Accounts Payable - Change in cash = €3,000,000 - €2,000,000 - €3,000,000 = -€2,000,000 **Ending Cash Balance**: - Year 1 ending cash balance + Change in cash = €10,000,000 + (-€2,000,000) = €8,000,000 **Why not B or C?** - **B (€12 million)**: Incorrectly adds the increase in accounts receivable to net income. - **C (€18 million)**: Incorrectly adds both the increase in accounts receivable and the decrease in accounts payable to net income.

Author: LeetQuiz Editorial Team