Question

In: Accounting

Which activity on the cash flow statement describes how well a company can supply itself funds...

Which activity on the cash flow statement describes how well a company can supply itself funds from what the company is in business to sell:

a) Operating Activity

b) Financing Activity

c) Investing Activity

d) All of the activities on the cash flow statement.

Solutions

Expert Solution

Cash flow from operating activities provides information to the company regarding the cash inflows and the cash outflows from the operating activities of the company by selling the product. Also this category of cash flow consists of increase or decrease in account receivable which gives a clear picture in collection of funds from the debtors. Moreover operating activities starting point is of net income which is calculated by considering the sales and purchases made by the company.

Cash flow from investing activities gives information regarding any sale or purchase of investment made by the company in fixed asset or long term assets. Cash flow from financing activities provides information regarding finance is made by the company from the outsiders or any other payment made to the outsiders on any finance earlier borrowed.

Therefore cash flow from operating activities describes how well a company can supply itself fund from what the company is in business for sale.

So the correct option is A

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ekkarill92 answered 2 years ago
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