What is not a cash flow from operating activities?
Cash flow from operating activities does not include long-term capital expenditures or investment revenue and expense.
Purchase of equipment for cash is not an operating cash flow.
Operating cash flow is equal to revenues minus costs, excluding depreciation and interest. Depreciation expense is excluded because it does not represent an actual cash flow; interest expense is excluded because it represents a financing expense.
Concepts: In general, the term 'cash flow' refers to the flow of cash in and out of the business. They are classified into three types of activities depending on the nature of the transactions. ∴ Estimating and costing activities are not included in Cash flow.
Answer and Explanation: The cash flows from operating activities are the cash flows that are related to the business operations of a firm such as cash received from customers, cash paid for advertising, and cash paid to suppliers.
Cash flow example from an operating activity is Interest Paid on Term Deposits by a Bank. Explanation: When producing a Cash Flow Statement, interest paid on term deposits by a bank is considered an operating activity.
Cash received from sale of goods is not an operating activity.
Cash payments for dividends to shareholders. Neither of these are operating activities. Cash payments for dividends to shareholders are classified under financing activities.
Interest and dividend income, while part of overall operational cash flow, are not considered to be key operating activities since they are not part of a company's core business activities.
9 Cash flows exclude movements between items that constitute cash or cash equivalents because these components are part of the cash management of an entity rather than part of its operating, investing and financing activities. Cash management includes the investment of excess cash in cash equivalents.
Which one of the following is not true about cash flow statement?
It reconciles ending cash balance with the balance as per bank statement is incorrect about the statement of cash flows.
Which one of the following is an example of cash flows from operating activities? Receipts of cash from sales.
- Receipt of cash from sales.
- Collection of accounts receivable.
- Receipt or payment of interest.
- Payment for materials and supplies.
- Payment of salaries.
- Payment of principal and interest for operating leases. ...
- Payment of taxes, fines, and license costs.
The operating activities section of the statement of cash flows focuses on the cash inflows and outflows related to the company's main business activities, such as revenues, expenses, and working capital changes.
Answer and Explanation:
As per the information given in the question, all the activities except payment of dividends are directly liked to the production of goods and services, and can be classified as operating activities. Payment or non-payment of dividend does not affect the production activities.
Microsoft Office XP is not an example of Operating System.
Expert-Verified Answer
The 'Purchase of merchandise' is not a component of the operating cycle; it is a preparatory step before the cycle involving sales and collections.
Common non-operating assets include unallocated cash and marketable securities, loans receivable, idle equipment, and vacant land.
Non-Cash Transactions: The cash flow statement focuses on actual cash movements, so non-cash transactions, such as depreciation and amortization, should not be included. These items are accounting adjustments that don't involve the physical flow of cash.
Payment of interest is not included because interest expense appears on the income statement and is, therefore, included in operating activities. Cash payments to settle accounts payable, wages payable, and income taxes payable are not financing activities.
How do I know if my cash flow statement is correct?
You need to compare the cash balances reported in the cash flow statement with the cash balances shown in the balance sheet and the bank reconciliation statement. You need to explain any differences or discrepancies, such as outstanding checks, deposits in transit, bank errors, or adjustments for reconciling items.
The cash flow statement does not account for liabilities and assets, which are recorded on the balance sheet. Furthermore, accounts receivable and accounts payable, each of which can be sizeable, are also not reflected in the cash flow statement.
Examples of non-cash items include depreciation, amortization, deferred income tax, stock based compensation that is provided to employees.
This differs from the income statement, which shows accruals of income and expenses based on GAAP accounting. Furthermore, the cash flow statement does not include non-cash items like depreciation.
A cash flow forecast sheet uses numbers from cash inflow and outflows only. Income and estimated expenses are not part of these calculations.
