Asked by NAINA MISHRA on Apr 27, 2024
Verified
Cash flow from operating activities is increased by:
A) depreciation and amortization.
B) a decrease in accounts receivable.
C) a decrease in inventory.
D) an increase in accounts payable.
E) All of the above
Operating Activities
Operating activities involve the primary revenue-generating activities of an entity, as reflected in its profits or losses from core operations.
Depreciation
The method of allocating the cost of a tangible asset over its useful life, reflecting the loss of value over time.
Accounts Payable
Liabilities to creditors for goods, services, or supplies delivered or used in the earning process but not yet paid for.
- Ascertain the various components and operations that influence the cash flow statement and understand the principles of managing cash flows.
Verified Answer
CA
Christina AdamsMay 03, 2024
Final Answer :
E
Explanation :
Depreciation and amortization are non-cash expenses that can increase operating cash flow. A decrease in accounts receivable means the company is collecting money faster, which increases cash flow. A decrease in inventory means the company is selling inventory and has cash coming in, which increases cash flow. An increase in accounts payable means the company is delaying payments and has more cash on hand, which increases cash flow. Therefore, all of the above choices can increase cash flow from operating activities.
Learning Objectives
- Ascertain the various components and operations that influence the cash flow statement and understand the principles of managing cash flows.