Choose the operating cash flow for Bikk Inc.
A) Principal payment on a note payable to a supplier for inventory purchased by Bikk for resale by Bikk.
B) Dividend paid to Bikk's shareholders.
C) Principal payment on a loan from a financial institution; Bikk used the proceeds to purchase inventory for resale.
D) Capitalized interest.

Question

Quizplus · Accepted Answer

Operating cash flow refers to the cash flow arising from the company's core operations. Out of the given options, only A represents cash flow arising from Bikk's core operations. The payment made to the supplier of inventory represents a cash outflow related to the purchase of inventory, which is necessary for Bikk's primary business activity of selling products.

Therefore, the correct answer is:

Answer: A
 Choice A represents cash flow arising from Bikk's core operations of purchasing and selling inventory. The other options, including B, C, and D are not related to operating cash flow, as they represent cash flows related to financing or investing activities.

Choose the Operating Cash Flow for Bikk Inc