Question

Multiple choice
Which statement does NOT describe operating cash flows?
A)Employee Salaries
B)Cash Received from Customers
C)Cash Paid to Suppliers
D)Cash Paid for New Factory Equipment

Answer 1

Answer:

A)Employee Salaries

as it is not mentioned the salary is paid by cash , it could be a bank transfer from the owners account to the accounts of his employees

Hope this helps you!!!

Answer 2

Answer:

The correct option is : (D) Cash Paid for new factory equipment’s.

Explanation:

• A measure of the amount of money made by a company's regular business operations is called operating cash flow (OCF).
• Operating cash flow shows if a business can produce enough positive cash flow to support and expand its operations; if not, it may need outside finance for capital growth.

• An essential metric for assessing the financial performance of a company's main business operations is operating cash flow.

• A cash flow statement's opening part, which also contains cash from investing and financing activities, shows operating cash flow.
• The financial impact of a company's net income (NI) from its main business operations is represented by operating cash flow.
• The first portion of the cash flow statement is titled operating cash flow, which is sometimes referred to as cash flow from operating operations.

• The indirect method and the direct approach are both ways to show operating cash flow on a cash flow statement.

• The indirect technique starts with the income statement's net income and then subtracts non-cash items to get the cash base amount.

• The direct method uses actual cash inflows and outflows on the cash flow statement and tracks all transactions in a period on a cash basis.

• The focus of operating cash flows is on cash inflows and outflows associated with a company's core business operations, including the sale and purchase of inventories, the provision of services, and the payment of salaries.
• Borrowing, purchasing capital goods, and paying dividends are examples of investing and financing transactions that are not included in the operating cash flows section and are instead reported separately.
• A company's statement of cash flows, which is divided into cash flows from operations, investing, and financing, can be used to find operating cash flow.

• Because cash flow indicators eliminate some accounting abnormalities, financial experts may prefer to focus on them.
• Particularly, operating cash flow offers a clearer view of the current state of firm activities.

• For instance, securing a sizable sale increases revenue significantly, but if the business is having trouble collecting the money, it is not truly beneficial for the business.
• On the other hand, if a corporation has a lot of fixed assets and employs accelerated depreciation estimates, it may have significant levels of operating cash flow but report a relatively low net income.

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