Which One of the Following Is the Definition of Operating

question 87

Multiple Choice

Which one of the following is the definition of operating cash flow?

• A) revenue minus expenses
• B) cash realized from the sale of assets
• C) cash flow originating from the issuance of securities
• D) cash generated by a firm's normal business activities
• E) pre-tax income

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Definitions:

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.

Net Purchases

The total amount spent on purchases of goods for resale after subtracting any purchase returns, allowances, and discounts.

Operating Expenses

Costs associated with running a business's day-to-day operations, excluding the cost of goods sold.

Income Summary

An account in which revenues and expenses are summarized, used in the closing process to prepare the accounts for the next period.