28
•
On
the
other
hand
the
operating
activities
may
affect
the
income
statement
through it’s net income
•
Next,
it
may
affect
the
current
assets
and
current
liabilities
of
the
balance
sheet
•
Last but
not
least, operating cash
flow play
the
most
important
role to
the
creation
of
statement
of
cash
flow
since
cash
from the
operating
activities
represents
the day-to-day operations which determine the
going concern of
the organization.
(Hongren et all, 2007 p.785).
To
what
we
can
conclude,
most
of
the
items
being
included
in
the
operating
activities are income statement items.
Operating Activities-
Income Statement Items
Cash Inflow:
From sale of goods and services
From returns on loans (interest received) and on equity securities ( dividens received)
Cash Outflow:
To suppliers for inventory
To employyes for services
To government for taxes
To lenders for interest
To others for expenses
Table 2.6. Cash Flow from Operating Activities
From: Accounting Principles, 2005
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