Which of the following statements is true?
A)A company with a positive net income will also have a positive net cash flow.
B)Payment of dividends is a cash outflow for operating activities.
C)Cash paid for dividends is subtracted from net income.
D)Payment of interest is a cash outflow for operating activities.

Question

Quizplus · Accepted Answer

Payment of interest is considered a cash outflow for operating activities, as it is a cost related to running the business. Option A is incorrect because net income and net cash flow are not necessarily the same, as changes in non-cash items such as depreciation can affect cash flow. Option B is incorrect because payment of dividends is a cash outflow for financing activities, not operating activities. Option C is also incorrect because cash paid for dividends is not subtracted from net income, but rather shown separately on the cash flow statement.

Which of the Following Statements Is True