Question : Non-cash transactions are ____________while preparing Cash Flow Statement.
Option 1: not considered
Option 2: considered
Option 3: both 1 and 2
Option 4: None of the above
Correct Answer: not considered
Solution : Answer = Not considered Cash Flow Statement shows only inflows and outflows of cash. It does not show non-cash transactions like the purchase of a building by issue of shares or debentures to the vendors or issue of bonuses. Hence, the correct option is 1.
Question : Why non-cash transactions are ignored while preparing a Cash Flow Statement?
Question : Which of the following statements is incorrect?
Question : Short-term investments are considered as Cash and Cash Equivalent. Hence, they do not affect cash flows and are therefore not considered while preparing cash flow statements.
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