Final answer:
The question concerns the Operating Activities section of the Cash Flow Statement and whether certain components have a positive or negative impact on cash flow. An increase in Accounts Receivable, Prepaid Expenses, and Inventory would have a negative impact; while an increase in Accounts Payable, Depreciation Expense, and Loss on Sale would have a positive impact.
Step-by-step explanation:
The student is asking about the components of the Cash Flow Statement, specifically under the Operating Activities section. These components can have either a positive (cash inflow) or negative (cash outflow) impact on cash flow.
- Decrease in Accounts Receivable (AR) would be a Positive Amount since it represents cash being received, but an Increase in AR would be a Negative Amount as it indicates a sale that has not yet been converted into cash.
- An Increase in Accounts Payable (AP) would be a Positive Amount because the company is retaining cash by delaying payment to suppliers.
- An Increase in Prepaid Expense is a Negative Amount as this reflects a payment made in advance for future expenses, resulting in a cash outflow.
- Depreciation Expense does not directly affect cash flow since it is a non-cash expense, but it is added back to net income in the cash flow statement, thus it is considered a Positive Amount.
- A Loss on Sale is also added back to net income since it is a non-cash loss, so it would be a Positive Amount.
- Increase in Inventory is a Negative Amount because purchasing more inventory represents a cash outflow.