Operating Cash Flows Would Include Which Of The Following? (Choose All That Apply.)

Cash flows from operating activities show that cash is generated (inflows) or used (outflows) from normal business operations over a specified accounting period. When cash is received from such activities i.e., during daily working activities of business, there is cash inflow or cash is increasing. On the other hand, when it is paid due to such activities, then there are outflows which means cash is decreasing. These activities include cash received from customers (inflows) and cash paid to creditors or suppliers or employees (outflows).

The correct options of this multiple choice question are (D) and (G), as cash paid for prepaid rent is related with the operations of the business and payment of salaries is also related with the operating activities of employees working in the business property. These are the cash outflows as the cash is going out of the business, so these are increased and cash is decreasing, so these are deducted from Net Income in Statement of Cash Flows.

The other options are incorrect choices here. The option (A) is related with financing activities as bank loan is taken. The option (B) is also dealt with financing activities as dividend paid to stockholders is a financial concern for the business. If we look option (C) it is related with investing activities as selling the building for cash is considered as investment activity. The option (E) is also related with financing activities as it relates with the repayment loan. The choice (F) is related with the investing activities as Capital Expenditures are incurred on equipment. The choice (H) is not related with cash flows activity as there is not an involvement of cash. The services are provided to the customers but the payment not received from him and as a result we debit accounts receivable account and credit sales account.