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QUESTION 1 : Which of the items listed below could appear in a company’s statement of cash flows?
(i) Dividends received.
(ii) Bonus issue.
(iii) Irrecoverable debts written off.
(iv) Profit on sale of a fixed asset.
(v) Repayment of loanOptions:
A (i), (ii) and (iv)
B (i), (ii) and (iii)
C (i) and (iv)
D (i) and (v)The Given answer is D.
What is the difference between Non-current Asset & Fixed Asset? If both are same then disposal of non current asset is included in Operating Activities of Cash Flows, why it is not included in answer?
There is no difference, its just terminology
The question is asking about cash flows, profit from a sale of assets is not the cash received.
The answer is d as these are the actual cash amounts received from the transaction. The other entries are SOI or balance sheet entries that are subject to accounting rules on how they are disclosed, hence these values are probably adjusted using methods such as accruals concept and matching principle for example
Why would profit on sale of a fixed asset not be in there too? Surely it should be a deduction from profit before tax!
Or am I missing something?But profit from sale of non-current asset is not cash.
The cash received from sale is shown on the statement but it is shown under cash flows from investing activities.
The question asks “what could appear in a company’s statement of cash flows”
When a company is preparing its financial statements, it will add in its profits made when selling its fixed assets.
That profit is just a book adjustment and is not cash.
Therefore it must be deducted from profit before tax. And that means that it SHOULD appear in the cash flow statement in arriving at cash from operiating activities
That’s what I think and if I’m wrong then I don’t understand why I’m wrong and what’s happening
Christine tellme again pleas why you think it shouldn’t be show
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