Firms have some choice as to when they disburse cash.A firm may delay making payments to suppliers, employees, and others during the last several days of an accounting period.When this firm makes the cash payments during the early part of the next period, cash flow from
A)operations decreases.
B)operations increases.
C)financing decreases.
D)financing increases.
E)investing decreases.

Question

Quizplus · Accepted Answer

Delaying payments to the next period means that the cash outflow associated with these payments is not reflected in the current period's cash flow from operations, leading to a temporary increase in cash flow from operations in the current period. When the payments are eventually made in the next period, it results in a decrease in cash flow from operations for that period.

Firms Have Some Choice as to When They Disburse Cash