Using the direct method of preparing the statement of cash flows,which of the following is not an activity generating operating cash flows?
A)Issuance of debt
B)Payments to suppliers
C)Payments for income taxes
D)Payments for operating expenses

Question

Quizplus · Accepted Answer

Issuance of debt is not an activity generating operating cash flows because it is a financing activity, which involves obtaining funds from creditors or investors. Operating activities involve cash inflows and outflows directly related to the day-to-day operations of the business, such as payments to suppliers, payments for operating expenses, and collections from customers. Payments for income taxes are also considered an operating activity, as they are necessary expenses incurred in the process of generating revenue.

Using the Direct Method of Preparing the Statement of Cash