During Year 4, Adams Company had a net increase in accounts payable for purchases on account.Accounting classifies this source of cash in the _____ section of the statement of cash flows.
A)Investing
B)Operations
C)Financing
D)Exchange
E)Funds Flow

Question

Quizplus · Accepted Answer

Accounts payable for purchases on account represents a source of cash from operations, as it indicates that the company received goods or services on credit and did not immediately pay for them. The statement of cash flows separates cash flows into three categories: operating activities, investing activities, and financing activities. Therefore, the correct answer is B, operations.

During Year 4, Adams Company Had a Net Increase in Accounts