is credit sales included in operating activities in the cash flow statement?

Answer 1

Under the indirect method of preparation of the cash flow statement, your starting line is Profit before taxation, so credit sales would have gone into the determination of profit before taxation. This is by far the more common method. Further down the statement, your increase/decrease in accounts receivable would take care of the credit sales not paid up, i.e. sitting in AR.

Under the direct method of preparation, you start off with Cash receipts from customers, so the credit sales remaining unpaid would have been adjusted out in arriving at cash receipts from customers.

Answer 2

operating activities relate day-to-day operational needs of the business. It includes income, expenses along with current assets and current liability increases and decreases. Operating activities in cash flow statement is important for strategic management. Note: credit sales are included in cfs because it creates a current asset, accounts receivables. thanks

Answer 3

Yes it is when preparing the books for tax purposes.