SRJ Corporation entered into the following transactions:
The accrual of interest expense on a six-month note payable.
Collected cash for services to be provided within the next six months.
The accrual of revenue.
Which of the following statements is correct with respect to determining the net cash flow from operating activities on a statement of cash flows?
A)The accrual of interest expense is added to net income.
B)Collecting cash for services to be provided in the future is deducted from net income.
C)The accrual of revenue is added to net income.
D)Collecting cash for services to be provided in the future doesn't require an adjustment to net income.

Question

SRJ Corporation entered into the following transactions:
The accrual of interest expense on a six-month note payable.
 Collected cash for services to be provided within the next six months.
 The accrual of revenue.
Which of the following statements is correct with respect to determining the net cash flow from operating activities on a statement of cash flows?
A)The accrual of interest expense is added to net income.
B)Collecting cash for services to be provided in the future is deducted from net income.
C)The accrual of revenue is added to net income.
D)Collecting cash for services to be provided in the future doesn't require an adjustment to net income.

Quizplus · Accepted Answer

Accruing interest expense reduces income but doesn't involve a cash flow; therefore it is added to net income.

SRJ Corporation Entered into the Following Transactions