Firms have some choice as to when they disburse cash.Delaying payments to suppliers and others during the last several days of an accounting period conserves cash and thereby _____ cash flow from operations for that period, and _____ cash flow from operations during the second period.
A)increases; decreases
B)increases; increases
C)decreases; ; increases
D)decreases; decreases
E)increases; has no effect

Question

Quizplus · Accepted Answer

Delaying payments to suppliers and others at the end of an accounting period conserves cash, which increases cash flow from operations for that period because less cash is going out. However, because these payments are merely delayed and not eliminated, they will decrease cash flow from operations in the subsequent period when the payments are eventually made.

Firms Have Some Choice as to When They Disburse Cash