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 loan
Options:
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?
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FADifference between Non-Current Asset and Fixed Asset?
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
12y ago#4Biggles is wrong - sorry!
The profit is adjusted by the profit on sale of the asset to arrive at the cash from operating activities - that is true. However that is in a sense just workings. The profit itself is not a cash flow and what Christine says is correct.
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