Which of the following would not affect the operating activities section of the statement of cash flows, using the indirect method?
A) Decrease in merchandise inventory
B) Payment on a note payable
C) Decrease in unearned rent
D) Depreciation expense

Question

Quizplus · Accepted Answer

Payment on a note payable would affect the financing activities section, not the operating activities section. The other options would affect operating activities: a decrease in merchandise inventory indicates a cash outflow as inventory is sold, a decrease in unearned rent indicates a cash inflow as rent is earned, and depreciation expense is a non-cash expense that is added back to net income in the operating activities section.

Which of the Following Would Not Affect the Operating Activities