Question

. In the accounting statement of cash flows, which one of these is calculated by adding back noncash expenses to net income and adjusting for changes in current assets and liabilities? A. cash flow from investing activities B. cash flow from financing activities C. net working capital D. cash flow from operating activities E. cash flow to investors

Answer 1

D. cash flow from operating activities

Step-by-step explanation:

There are three types of activities in the cash flow statement which are described below:

1. Operating activities: It includes those transactions which affect the working capital. The increase in current assets and a decrease in current liabilities would be subtracted and the decrease in current assets and an increase in current liabilities would be added.

These changes in working capital would be adjusted accordingly. Moreover, the depreciation expense is added to the net income as it is a non-cash expense and the loss on sale of assets is added whereas the gain on sale of assets is deducted

2. Investing activities: It records those activities which include purchase and sale of the long term assets i.e fixed assets and intangible assets. The purchase is an outflow of cash whereas sale is an inflow of cash

3. Financing activities: It records those activities which affect the long term liabilities and stockholder equity. The issue of shares is an inflow of cash whereas redemption and dividend is an outflow of cash.