A company reported net income for the current year. Which of the following business transactions would cause its cash from operating activities to be higher than its net income?
A)Cash dividends were paid to stockholders during the year.
B)Depreciation expense was recorded for the year.
C)A bank loan was repaid during the year.
D)Equipment was purchased for cash during the year.

Question

Quizplus · Accepted Answer

Depreciation expense is a non-cash expense that is added back to net income in the indirect method of preparing the statement of cash flows, so it would increase cash from operating activities. Choices A, C, and D all involve cash outflows that would reduce cash from operating activities.

A Company Reported Net Income for the Current Year