When Preparing the Note Attached to the Cash Flow Statement

question 3

Multiple Choice

When preparing the note attached to the cash flow statement reconciling profit and cash flow from operations, proceeds from the disposal of non-current assets are:

• A) added back to the profit.
• B) sometimes added back to the profit and sometimes subtracted from the profit depending on whether a loss or profit on disposal is incurred.
• C) subtracted from the profit.
• D) do not appear in the reconciliation.

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Definitions:

Investing Activities

Part of the cash flow statement that shows the cash spent on and generated from long-term asset operations and investments.

Long-Term Investments

Investments in stocks, bonds, or other assets that a company intends to hold for more than one fiscal year.

Interest Revenue

Income earned from lending money or investing in interest-bearing financial instruments.

Free Cash Flow

Cash Flows from Operating Activities less Dividends less Capital Expenditures.