Which of the following BEST demonstrates cash flow from operations?
A) Transactions involved in buying and selling goods and services
B) Net cash used in or provided by investment
C) Cash flow from borrowing or issuing stock
D) Outflows for payments of dividends
E) Inflows of cash that will be used to repay borrowed money

Question

Quizplus · Accepted Answer

Cash flow from operations refers to the cash generated or used by a company's core business operations. Transactions involved in buying and selling goods and services are directly related to a company's operations and thus are the best demonstration of cash flow from operations.

Option B refers to cash flows related to investments in assets such as property, plant, and equipment which are not part of core operations.

Option C refers to cash flows from financing activities.

Option D refers to cash outflows related to payment of dividends to shareholders, which again are not directly related to operations.

Option E refers to inflows of cash that are typically used to repay borrowed money and do not necessarily represent cash flows from operations.

Which of the Following BEST Demonstrates Cash Flow from Operations