Asked by Hallie Adair on May 16, 2024
Verified
Cash flow from operating activities is decreased by:
A) depreciation and amortization.
B) a decrease in accounts receivable.
C) a decrease in inventory.
D) a decrease in accounts payable.
E) All of the above
Operating Activities
Business activities directly related to the production and delivery of goods and services.
Depreciation
The process of allocating the cost of a tangible asset over its useful life, reflecting the asset's wear and tear, deterioration, or obsolescence.
Accounts Payable
Liabilities of a business that represent amounts owed to creditors for goods and services the company has received but not yet paid for.
- Detect a variety of constituents and endeavors that affect the cash flow statement, and gain insight into the administration of cash flows.
Verified Answer
KK
KEVIN KENNETHMay 23, 2024
Final Answer :
D
Explanation :
Depreciation and amortization are non-cash expenses and thus do not affect cash flow. A decrease in accounts receivable or inventory would actually increase cash flow from operating activities because it means cash is being collected or inventory is being sold without immediate replacement. A decrease in accounts payable, however, means the company is paying off its liabilities, which would decrease cash flow from operating activities.
Learning Objectives
- Detect a variety of constituents and endeavors that affect the cash flow statement, and gain insight into the administration of cash flows.