Which of the Following Operating Activities Results in a Cash

question 34

Multiple Choice

Which of the following operating activities results in a cash outflow?

• A)Paying creditors for merchandise
• B)Collecting accounts receivable
• C)Making cash sales
• D)Receiving deposits recorded as unearned revenue

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Definitions:

Interest Revenue

Income earned on investments like savings accounts, certificates of deposit, and bonds, typically presented within non-operating income on the income statement.

Current Ratio

A measure of liquidity calculated by dividing a company's current assets by its current liabilities, indicating how well it can cover its short-term obligations.

Capital Lease

A lease agreement that transfers substantially all the risks and rewards of ownership of the asset to the lessee, and is recorded as an asset and liability on the balance sheet.

GAAP

Generally Accepted Accounting Principles, a framework of accounting standards, rules, and procedures used in the compilation of financial statements in the US.