AAA OT on page 126 says:
Note that the cash flow statement should show no investment in long-term assets (and remember that it would only show payments to suppliers and employees if prepared under the direct method).
I understand that above refer to cash flow statement, not forecast right? and cash flow forecast should include investment in non current asset e.g. 2 years health and safety license to sell food let's say for restaurant chain?
Thank you,
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AAA notes- CF forecast question
7y ago#1You have to read the solution in the context of the specific question - it is a not meant to be a generic statement that is universally true. Here it is with words added to spell out the context::
"Note that the cash flow statement IN THE 2018 FINANCIAL STATEMENTS should show no investment in long-term assets BECAUSE THERE IS NO CAPITAL EXPENDITURE IN THE 2018 FORECAST.".
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