A Note to the Accounts Reconciling Cash Flows from Operating

question 58

Multiple Choice

A note to the accounts reconciling cash flows from operating activities to net profit is required because:

• A) Complex calculations are required to convert cash based revenues.
• B) Items such as depreciation are only recorded in a cash system and not an accrual system.
• C) There is likely to be a disparity between cash from operations under AASB 107 and the profits reported in the income statement.
• D) The direct method is required under AASB 107.
• E) None of the given answers.

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Definitions:

Recipient Spouse

The spouse who receives alimony or similar payments from the other spouse in a divorce settlement.

Child Support

Payments mandated by a divorce decree or agreement intended for the financial support of the taxpayer's children.

Alimony

Payments made to a spouse or former spouse under a divorce or separation agreement, which may be deductible by the payer and taxable to the recipient under certain conditions.

Moving Expenses

Costs associated with relocating, such as transportation and packing, which may be deductible from taxable income under certain conditions for employment-related moves.