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Some of the answers from revision kit clearly state that interest received goes to investment activities section of the statement of cash flow, whereas some other answers put interest received/paid in operating activities. what is the explanation to these different approaches and how are we supposed to treat interest received/paid at the exam?
Also, what about bank overdraft. I suppose it’s a financing activity whereas, according to the kit, it’s not. Is it an operating activity? For exam purposes, which is the clear answer, meaning what would ACCA team believe to be the correct one. Thank you beforehand
As I do state in my free lectures, the accounting standard allows interest to be shown under either of the two headings. Therefore either would be marked correctly in the exam if it is relevant.
A bank overdraft is a negative bank balance. The change in the total of all cash and bank balances is what appears at the end of the statement (and is what is being analysed in the statement) – it does not appear under any of the three headings.
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