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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Cash outflows from operating activities come from

  1. a. collection of sales revenues.
  2. b. payment for operating costs.
  3. c. acquisition of operating equipment.
  4. d. retirement of bonds.
  5. e. None of these.

To determine

Identify the option which states the cash outflows obtained from the operating activities.

Explanation

Cash Flows from Operating Activities:

This is the first category of a cash flow statement in which the operational and profit generating activities in a firm are shown. The operating cash flows increase or decrease the current assets and current liabilities of a firm.

b.

Cash outflows from operating activities come from the payment for operating activities. When the company makes payment for the operating activities, cash outflow is made. Therefore, this option is correct.

a.

Cash outflows from operating activities do not come from the collection of sales revenue. With the revenue obtained from the sale, the cash comes in a company...

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