Question

Which of the following current liability accounts is included in the adjustment of expenses to obtain cash flow from operating activities?

(a) Accounts payable.
(b) Notes payable and current maturities of long-term debt.
(c) Accrued liabilities.
(d) Both (a) and (c).

Answer 1

Both Accounts payable and Accrued liabilities are current liability accounts included in the adjustment of expenses to obtain cash flow from operating activities.

Step-by-step explanation:

When adjusting expenses to obtain cash flow from operating activities, certain current liability accounts are considered. The question at hand is which current liability accounts are included in this adjustment. The correct answer is: (d) Both (a) and (c), which include Accounts payable (a) and Accrued liabilities (c). Accounts payable relates to outstanding debts for goods and services the company received. Accrued liabilities are expenses that have been incurred but not yet paid. These both affect the cash flow from operating activities as changes in these accounts (increases or decreases) reflect the cash paid or received during the operating cycle.