Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

13. Statement of Cash Flows

Operating Activities: Indirect Method

Financial Accounting

13. Statement of Cash Flows

Operating Activities: Indirect Method

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following is considered an operating activity when preparing the statement of cash flows using the indirect method?

Payment of dividends to shareholders

Cash received from customers

Cash paid to acquire equipment

Issuance of common stock

Previous problemNext problem

Verified step by step guidance

Understand the concept of operating activities: Operating activities are the primary revenue-generating activities of a business and include transactions related to the core operations, such as cash received from customers and cash paid to suppliers.

Review the indirect method for preparing the statement of cash flows: This method starts with net income and adjusts for non-cash transactions, changes in working capital, and other items to calculate cash flows from operating activities.

Analyze each option provided: Payment of dividends to shareholders is a financing activity, cash paid to acquire equipment is an investing activity, and issuance of common stock is also a financing activity.

Identify the correct option: Cash received from customers is directly related to the core operations of the business and is considered an operating activity under the indirect method.

Conclude that cash received from customers is the correct answer because it reflects cash inflows from the primary operating activities of the business.