Planet & Co.reported net income for the current year.Which of the following business transactions would cause cash from operating activities to be higher than the amount of 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 reduces net income but doesn't affect cash. Therefore, it would cause cash from operating activities to be higher than net income.

Option A pertains to financing activities, while options C and D pertain to investing activities, and do not affect cash from operating activities.