Question

Which of the following is a way that the operating activity section of the statement of cash flows adjusts Net Income from the balance​ sheet? A. It removes the cash used for investment purposes. B. It subtracts all expenses and costs related to a​ firm's operating activities. C. It adds the cash that flows from investors to a firm. D. It adds all nonminuscash entries related to a​ firm's operating activities.

Answer 1

Answer:

The correct answer to this question is D) where it adds all the non cash entries related to a firm's operating activities.

Explanation:

A cash flow statement is a financial statement which shows how cash and cash equivalent are affected by change in the balance sheet accounts and income statements accounts, and cash flow shows this affect on cash and equivalent by breaking down the cash flow statement analysis in to operating , investing and financing activities.

The way in which operating activity now helps in adjusting the net income from balance sheet is by adding all the non cash entries, which are related to company's operating activities.