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In preparing the cash flows from operating activities section of a statement of cash flows (using the indirect method), which of the following statements are correct?

In preparing the cash flows from operating activities section of a statement of cash flows (using the indirect method), which of the following statements are correct?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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In preparing the cash flows from operating activities section of a statement of cash flows (using the indirect method), which of the following statements are correct? 1. Loss on sale of operating non-current assets should be deducted from profit before tax. 2. Increase in inventory should be deducted from operating profits. 3. Increase in payables should be added to operating profits. 4. Depreciation expense should be added to profit before tax. A) 1, 2 and 3 B) 1, 2 and 4 C) 1,3 and 4 D) 2, 3 and 4
Transcribed Image Text:In preparing the cash flows from operating activities section of a statement of cash flows (using the indirect method), which of the following statements are correct? 1. Loss on sale of operating non-current assets should be deducted from profit before tax. 2. Increase in inventory should be deducted from operating profits. 3. Increase in payables should be added to operating profits. 4. Depreciation expense should be added to profit before tax. A) 1, 2 and 3 B) 1, 2 and 4 C) 1,3 and 4 D) 2, 3 and 4
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