Question

Indicate whether each of the following items would result in net cash flow from operating activities being higher (H) or lower (L) than net income.

a. Increase in accounts payable

b. Amortization expense

c. Decrease in accrued liabilities

d. Loss on sale of assets

e. Decrease in accounts receivable

f. Decrease in deferred tax assets

g. Increase in deferred revenue

h. Decrease in income taxes payable

i. Decrease in prepaid expenses

Answer 1

item	higher(H) / Lower (L)
a.increase in accounts payable	H
b.amortization expense	H
c.decrease in accured liabilities	L
d.loss on sale of assets	H
e.decrease in accounts receivable	H
f.decrease in deferred tax assets	H
g.Increase in deferred revenue	L
h.decrease in income tax payable	H
i.decrease in prepaid expenses	H

note:

an increase in current assets will reduce the cash flow from operating activities and vice versa.

an increase in current liabilities will increase the cash flow from operating activities and vice versa.