Question

which of the following accounts may relate to more than one cash flow category? (check all that apply.) multiple select question. prepaid expenses may affect both operating and investing activities accumulated depreciation may affect both operating and investing activities. accounts receivable may affect both operating and financing activities retained earnings may affect both operating and financing activities.

Answer 1

The accounts that may relate to more than one cash flow category include prepaid expenses, accumulated depreciation, accounts receivable, and retained earnings, as they can intersect between operating, investing, and financing activities.

Step-by-step explanation:

The accounts that may relate to more than one cash flow category are:

• Prepaid expenses: These may affect both operating and investing activities because they are paid for in advance and can be associated with the daily operations of the business as well as long-term investments.
• Accumulated depreciation: This may affect both operating and investing activities as it represents the allocation of the cost of tangible assets over their useful lives, impacting profit and loss through depreciation expense while also relating to the sales or disposals of assets, which are investing activities.
• Accounts receivable: Typically, these affect operating activities; however, they can also impact financing activities through factoring or other financing arrangements.
• Retained earnings: These affect both operating and financing activities. Operating activities influence retained earnings through profits and losses, while financing activities can impact through dividends and reinvestment decisions.