In a statement of cash flows, a change in prepaid expenses would be classified as:
A) an operating activity.
B) a financing activity.
C) an investing activity.
D) a noncash item that need not appear on the statement of cash flows.

Question

Quizplus · Accepted Answer

Prepaid expenses represent a payment made in advance for goods or services that will be received in the future. As such, they are typically classified as an operating activity on the statement of cash flows because they relate to the company's day-to-day operations.

In a Statement of Cash Flows, a Change in Prepaid