Which of the following statements is true?
A)A company with a net loss will also have a negative net cash flow.
B)Payment of dividends is a cash outflow for financing.
C)Cash paid for accounts payable is added to net income.
D)Purchase of equipment is a cash outflow for operating activities.

Question

Quizplus · Accepted Answer

Payment of dividends is considered as a cash outflow for financing activities in the statement of cash flows. Option A is not always true as a company can have a negative net income but still have positive net cash flow. Option C is not correct as cash paid for accounts payable is deducted from net income to calculate cash flow from operating activities. Option D is not true as purchase of equipment is a cash outflow for investing activities in the statement of cash flows.

Which of the Following Statements Is True