Question

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows, the cash flows from operating activities generally are affected by

Answer 1

Answer: a. Net income, current assets, and current liabilities

Explanation:

The Operating Cashflow relates to cash transactions that have to do with the normal operations of the business. In other words, the business that the firm does to make revenue. It therefore includes, production, purchases, admin expenses, net income and the assets required to run the business.

Operating cashflows will therefore be affected by the Net Income as this is the end result of the business transactions the business engaged in. The current assets were needed to sell goods as well as being derived from selling goods and the current liabilities enabled the company to buy goods that they sell amongst other things.

Net income, current assets, and current liabilities are directly related to the operations of the business and so affect the Operating cashflows.