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:

Bad Debts Expense

Represents the recognition of accounts receivable that are not expected to be collected.

Non-Current Assets

Assets owned by a company not expected to be converted to cash or used within the business's operating cycle or fiscal year.

Investing Cash Flows

Part of the cash flow statement that shows the cash spent on and received from investment activities, including assets purchases and sales.

Acquisition of Subsidiary

The process of obtaining control of another company, which then becomes a subsidiary, often involving the purchase of its shares.