When calculating the cash flows from operating activities which of the following statements is true? a) The tax paid should be deducted b) The interest payable should be deducted c) The tax paid should be added d) None of the above

When calculating the cash flows from operating activities which of the following statements is true? a) The tax paid should be deducted b) The interest payable should be deducted c) The tax paid should be added d) None of the above

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

When calculating the cash flows from operating activities which of the
following statements is true?
a) The tax paid should be deducted
b) The interest payable should be deducted
c) The tax paid should be added
d) None of the above

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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