Accounting · Cash Flow Statement
Evaluate the following statements regarding the Statement of Cash Flows: Statement I: Depreciation is added back to net profit under the indirect method because it is a non-cash expense. Statement II: Dividend paid to shareholders is classified as an operating activity. Statement III: Purchase of land by issuing equity shares is recorded as both investing outflow and financing inflow in cash flow statement. Statement IV: Cash equivalents are highly liquid short-term investments with insignificant risk of value changes. Statement V: A decrease in trade payables represents cash outflow and is subtracted from net profit under the indirect method. Which of the above statements are correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Only I and II
- 2Only II and III
- 3Only I, IV and V✓
- 4All statements are correct
Correct answer
Only I, IV and V
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