Question

Which one of the following affects cash during a period?
a. Recording depreciation expense
b. Declaration of a cash dividend
c. Write-off of an uncollectible account receivable
d. Payment of an accounts payable

Answer 1

Answer: d. Payment of an accounts payable

Explanation:

The payment of an accounts payable affects cash because it means that cash was used to pay off the payable in question and therefore the cash that the company holds has now reduced.

In the Statement of Cashflows, this is accounted for under the Operating Activities of the business. A decrease in accounts payable is subtracted from the net income to show that cash has reduced.