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Basic Question 4 of 20
Which of the following transactions would increase the net cash flow from operating activities?
B. The issuance of capital stock for cash at a price above par
C. The purchase of a delivery truck by issuing a note payable
D. The sale of equipment for cash at a gain
A. The collection of an account receivable from a customer
B. The issuance of capital stock for cash at a price above par
C. The purchase of a delivery truck by issuing a note payable
D. The sale of equipment for cash at a gain
User Contributed Comments 13
| User | Comment |
|---|---|
| synner | collection of AR, AR decreased, so increase net cash flow. |
| Winner | Note that the questions asks "NCF from Operating Activities" |
| teddajr | Sale of Equipment for CASH at gain is Financing Activity. |
| bahodir | teddajr, are you sure? |
| quantwannabe | Sale of equipment for cash at gain is an investment activity, but this needs to be substracted in operating activitis otherwise we would be counting it double in investment and operating activity. Gain should be subtracted and loss should be added to operating activity. |
| nichmax | Gain and Loss on sale of assets-Part of CFI |
| nayagan | Equipment is ppE so investing |
| boddunah | gain on sale of equipment is investing activity. and its non cash item it should not affect cash flow statements.it is deducted from ocf to remove non cash item effect. |
| judylyh | C. The purchase of a delivery truck by issuing a note payable. what activity is this? |
| hoyleng | judyiyh : non cash item |
| johntan1979 | CFO CFF non-cash CFI |
| Shaan23 | Thumbs up JOHNTAN |
| birdperson | johntan is spot on in my book |
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Learning Outcome Statements
describe the steps in the preparation of direct and indirect cash flow statements, including how cash flows can be computed using income statement and balance sheet data
CFA® 2024 Level I Curriculum, Volume 2, Module 4.