When Preparing the Note Attached to the Statement of Cash

question 9

Multiple Choice

When preparing the note attached to the statement of cash flows reconciling operating profit with cash flow from operations, which statement is not true?

• A)An increase in current assets is deducted from profit.
• B)A decrease current assets is added to profit.
• C)An increase in current liabilities is deducted from profit.
• D)All of the above are true.

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Definitions:

Carrying Amount

The book value of an asset or liability; for assets, it's typically the original cost less any depreciation.

Face Value

The nominal value stated on a financial instrument, such as a bond or stock certificate, representing its legal value.

Bond Issue

The process of offering bonds to investors as a method of securing capital.

Bond Amortization

The gradual reduction of the bond discount or premium over the life of the bond, affecting the bond's book value and interest expense calculations.