CFA Practice Question

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CFA Practice Question

Which of the following transactions would increase the net cash flow from operating activities?

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
Correct Answer: A

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 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
Shaan23 Thumbs up JOHNTAN
birdperson johntan is spot on in my book
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