Question

On November 1 of Year 1, Falloch, Inc. paid $2,400 cash for a contract allowing the company to use office space for one year. The company's fiscal closing date is December 31. Based on this information, what is the amount of cash flow from operating activities appearing on the Year 1 statement of cash flows?

1) $2,400
2) Cannot be determined
3) Depends on other factors
4) Not applicable

Answer 1

The amount of cash flow from operating activities on the Year 1 statement of cash flows is $2,400. Hence, the correct answer is option 1.

Step-by-step explanation:

The amount of cash flow from operating activities appearing on the Year 1 statement of cash flows is $2,400.

Operating activities are the day-to-day activities of a business that generate revenue and incur expenses. In this case, the payment of $2,400 cash for the contract to use office space falls under operating activities because it is a normal expense related to the company's operations.

Therefore, the correct answer to the question is 1) $2,400.