Question

Which of the following would be included in the cash flow from operating activities section of the statement of cash flow

1) accrual of salary expense at year-end
2) cash collected for acc receivables
3) payments of cash dividends to the owners
4) purchase of land with cash

Answer 1

Cash collected for accounts receivable is included in the cash flow from operating activities, as it involves transactions related to the primary operations of the business. Hence, the correct answer is option (2).

Step-by-step explanation:

The question asks which of the following would be included in the cash flow from operating activities section of the statement of cash flows:

1. Accrual of salary expense at year-end.
2. Cash collected for accounts receivable.
3. Payments of cash dividends to the owners.
4. Purchase of land with cash.

The correct answer is the second option, cash collected for accounts receivable. This is because cash flow from operating activities includes transactions related to the primary operations of the business such as cash received from customers, payment of operating expenses, interest, and taxes.

Accrual of salary expenses is an adjusting entry for recording expenses and does not involve actual cash flow. Payments of cash dividends are financing activities, and purchasing land with cash is an investing activity.