Answer:
The correct answer is (c) collection of sales revenue.
Because, sales revenue is an operating activity and it is also an inflow.
The other choices are not correct and are not relevant because,
(a) Payment for raw materials is although an operating activity but it involves cash out flow but not inflow.
(b) Gain on sale of operating equipment is not an operating activity but it is an investing activity.
(d) Issuing capital stock is a financing activity though it involves a cash inflow.
(e) Issuing bonds is a financing activity though it involves a cash inflow.
Thus the correct option is (c)
Answer:
The correct answer is (e) only a and c.
Because, (a) cash dividends, is a cash outflow in financing activity.
(c) The purchase of long-term assets is a cash outflow in investing activity.
The other choices are not correct and are not relevant because,
(b) The sale of old equipment is a cash inflow and it is a sources of cash in investing activity.
Thus the correct option is (e)
Answer:
Reasons for the adding the increases in liabilities and decreases in current assets added back to the net income while computing net operating cash flows:
While computing net operating cash flows the increases in current liabilities are to be added back to the net income because there is no cash outflow during the period and the amount remains as liquid cash regarding that particular liability. The decrease in current assets are added back to the net income because when there is decrease in any current asset which results in cash inflows into the company unless there is an exchange for the same for the other current asset.