Economics · Accounting and Cash Flow Statement
Consider the following statements regarding the preparation of a Cash Flow Statement: Statement I: An increase in trade payables is added to net profit in operating activities because it represents cash saved by delaying payments. Statement II: Depreciation is subtracted from net profit under the indirect method to calculate operating cash flow. Statement III: Cash proceeds from selling an old office building are classified under financing activities. Statement IV: Payment of cash dividends to shareholders is classified as a financing activity. Statement V: Short-term highly liquid investments with maturities of 3 months or less are treated as cash equivalents and excluded from investing activities. Which of the above statements are CORRECT?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Only I, IV, and V✓
- 2Only IV and V
- 3Only II and III
- 4Only I and II
Correct answer
Only I, IV, and V
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