BuyFindarrow_forward

Managerial Accounting: The Corners...

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

Solutions

Chapter
Section
BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
1 views

Which of the following adjustments helps to convert accrual income to operating cash flows?

  1. a. Deduct from net income all noncash expenses.
  2. b. Add to net income a decrease in inventories.
  3. c. Add to net income a decrease in accounts payable.
  4. d. Deduct from net income an increase in accounts payable
  5. e. None of these.

To determine

Identify the adjustment which can help to convert the accrual income to operating cash flows.

Explanation

Operating Cash Flow:

The cash flow obtained from the operational and profit generating activities in a firm are termed as the operating cash flow. The operating cash flows increase or decrease the current assets and current liabilities of a firm.

b.

The addition of decrease in inventories to the net income helps to convert the accrual income to operating cash flows. The decrease in number of inventories is a decrease in noncash current assets, this when added to the net income can help net income convert to an operating cash flow. Therefore, b is the correct option.

a.

The deduction of all noncash expenses from net income will not affect the operating cash flow...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

It is common for long-term asset accounts to show a decrease in the net balance from year to year.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

Suppose you are a director of an energy company that has three divisionsnatural gas, oil, and retail (gas stati...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)