Question

Indicate which of the following current assets and current liabilities are operating accounts (O) and thus included in the adjustment of net income to cash flow from operating activities and which are cash (C), investing (I), or financing (F) activities

Current portion of long-term debt

Answer 1

The current portion of long-term debt is classified as a financing (F) activity in the context of cash flow from operating activities.

Step-by-step explanation:

The question relates to distinguishing between different types of current assets and liabilities in the context of a company's cash flow from operating activities. Specifically, the inquiry is about classifying the current portion of long-term debt. In accounting, the current portion of long-term debt is considered a current liability and is classified as financing (F) activity when adjusting net income to cash flow from operating activities. This classification is because this portion of debt is due within the next year and is related to the financing of the company's long-term obligations, rather than its operational business transactions.