{"id":268473,"date":"2025-07-24T05:48:04","date_gmt":"2025-07-24T05:48:04","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=268473"},"modified":"2025-07-24T05:48:06","modified_gmt":"2025-07-24T05:48:06","slug":"which-part-of-a-cash-flow-statement-would-be-affected-by-the-below-items","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/07\/24\/which-part-of-a-cash-flow-statement-would-be-affected-by-the-below-items\/","title":{"rendered":"Which part of a cash flow statement would be affected by the below items"},"content":{"rendered":"\n

Which part of a cash flow statement would be affected by the below items? <\/p>\n\n\n\n

A Operating, investing, or financing part. <\/p>\n\n\n\n

B Decrease in depreciation Increase in inventory <\/p>\n\n\n\n

C Decrease in accounts payable Payment of dividend <\/p>\n\n\n\n

D Proceeds from sale of long-term assets<\/p>\n\n\n\n

The correct answer and explanation is:<\/mark><\/strong><\/p>\n\n\n\n

The correct answer is A) Operating, investing, or financing part<\/strong>.<\/p>\n\n\n\n

Here\u2019s the breakdown of how each item affects different sections of a cash flow statement:<\/p>\n\n\n\n

    \n
  1. Decrease in depreciation<\/strong>: Depreciation is a non-cash expense that reduces the book value of assets, primarily affecting the operating activities<\/strong> section of the cash flow statement. A decrease in depreciation means that there is a lower amount added back to the cash flows from operating activities, since depreciation is subtracted in the income statement but does not involve cash outflow.<\/li>\n\n\n\n
  2. Increase in inventory<\/strong>: An increase in inventory represents a use of cash because the company has purchased more inventory that it hasn’t yet sold. This item impacts the operating activities<\/strong> section. Under the indirect method, an increase in inventory reduces cash flow from operations, as more cash is tied up in inventory.<\/li>\n\n\n\n
  3. Decrease in accounts payable<\/strong>: Accounts payable represent amounts a company owes to suppliers. A decrease means the company has paid off some of its payables, reducing its cash flow. This affects the operating activities<\/strong> section, as it reflects a use of cash in day-to-day operations.<\/li>\n\n\n\n
  4. Payment of dividend<\/strong>: Dividends are paid to shareholders and are not part of regular business operations. As a result, dividend payments fall under financing activities<\/strong> in the cash flow statement. This section tracks cash flows related to the company\u2019s capital structure, including debt and equity financing.<\/li>\n\n\n\n
  5. Proceeds from sale of long-term assets<\/strong>: The sale of long-term assets, such as property, equipment, or investments, generates cash inflows. These proceeds are reflected in the investing activities<\/strong> section, which records the cash flows associated with the purchase and sale of assets.<\/li>\n<\/ol>\n\n\n\n

    In summary, the cash flow statement consists of three sections: operating, investing, and financing activities. Each item mentioned corresponds to one of these sections, reflecting how cash is either used or generated in the company’s core operations, investment decisions, or financing activities.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Which part of a cash flow statement would be affected by the below items? A Operating, investing, or financing part. B Decrease in depreciation Increase in inventory C Decrease in accounts payable Payment of dividend D Proceeds from sale of long-term assets The correct answer and explanation is: The correct answer is A) Operating, investing, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-268473","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/268473","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=268473"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/268473\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=268473"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=268473"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=268473"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}