Accounting · Statement of Cash Flows
Quartz Co is preparing its statement of cash flows for the year ended 30 June 20X9 using the indirect method. The following financial data is available: Profit for the year: $450,000 Income tax expense: $110,000 Interest expense (Financing category in P&L): $40,000 Operating profit (IFRS 18 defined subtotal): $600,000 Depreciation: $75,000 Increase in Inventories: $25,000 According to IFRS 18 and the consequential amendments to IAS 7, what is the mandatory starting point for the reconciliation of net cash from operating activities, and what is the 'Cash generated from operations' before tax and interest?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Starting Point: Profit for the year ($450,000); Cash generated from operations: $500,000
- 2Starting Point: Operating profit ($600,000); Cash generated from operations: $510,000
- 3Starting Point: Operating profit ($600,000); Cash generated from operations: $650,000✓
- 4Starting Point: Profit before tax ($560,000); Cash generated from operations: $610,000
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Starting Point: Operating profit ($600,000); Cash generated from operations: $650,000
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