Which of the following items would not appear in the cash flow statement?
Correct answer: Option c) Depreciation Expense. Explanation: Depreciation expense is reported under the indirect method of cash flow statement and not the direct method.
This differs from the income statement, which shows accruals of income and expenses based on GAAP accounting. Furthermore, the cash flow statement does not include non-cash items like depreciation.
This is the correct answer! Retained earnings is never shown on the statement of cash flows.
Concepts: In general, the term 'cash flow' refers to the flow of cash in and out of the business. They are classified into three types of activities depending on the nature of the transactions. ∴ Estimating and costing activities are not included in Cash flow.
Investing and financing transactions that do not require the use of cash or cash equivalents should be excluded from a cash flow statement. Such transactions should be disclosed elsewhere in the financial statements in a way that provides all the relevant information about these investing and financing activities.
A cash flow statement tracks the inflow and outflow of cash, providing insights into a company's financial health and operational efficiency. The CFS measures how well a company manages its cash position, meaning how well the company generates cash to pay its debt obligations and fund its operating expenses.
The transaction that would not appear on the cash flow statement is the purchase of land for stock (A), as it does not involve actual cash flows. In contrast, the issuance of a bond (B), payment of cash dividends (C), and equipment purchased for cash (D) all involve cash movements and would appear on the statement.
Answer and Explanation: Correct answer: Option c) Depreciation Expense. Explanation: Depreciation expense is reported under the indirect method of cash flow statement and not the direct method.
Final answer: Depreciation expense is not explicitly identified on a cash flow statement prepared using the indirect method because it is a non-cash charge that is adjusted for in the operating activities section.
Expert-Verified Answer
The option that would not be listed under cash outflows in a financial plan is interest earned, as it represents money coming in from investments or savings.
Which of the following would not result in cash flow?
Payment of interest on loan would not be considered as a cash flow from operating activities for a non-fianncial company.
Answer and Explanation:
It is broken down into three sections with operational cash flow, investment cash flow, and financing cash flows. Among the choices, the cash flows from taxation is not a category of cash flows.
It shows the cash payments coming in and going out of the company over a period of time—usually a quarter or a year. A cash flow statement is generally broken down into 3 main sections: operating activities, investing activities, and financing activities.
The statement of cash flows does not report revenues and expenses because these items can be found in the income statement.
In accounting, a non-cash item refers to an expense listed on an income statement, such as capital depreciation, investment gains, or losses, that does not involve a cash payment.
However, Profitability is not included in the statement of cash flows. Profitability is usually assessed through other financial statements such as the income statement.
Cash inflows from operating activities affect items that appear on the income statement and include: (1) cash receipts from sales of goods or services; (2) interest received from making loans; (3) dividends received from investments in equity securities; (4) cash received from the sale of trading securities; and (5) ...
Which of the following is NOT a cash outflow for the firm? depreciation.
Shows the changes in cash for the same period of time as that covered by the income statement. The cash flow statement shows all sources of cash and all of the uses of cash. Provides information about cash receipts (inflows) and cash payments (outflows).
The cash flow statement includes only inflows and outflows of cash and cash equivalents; it excludes transactions that do not directly affect cash receipts and payments. These non-cash transactions include depreciation or write-offs on bad debts or credit losses to name a few.
What is not included in cash flow?
Cash flow from investing activities excludes certain transactions, despite their broad scope. These typically include short-term investments or cash equivalents, which are classified under operating activities. Additionally, cash flows from financing activities are also not included.
In the statement of cash flows prepared under the direct method, the item that does not appear is C. Depreciation Expense. The direct method focuses strictly on cash transactions, showing how cash flows in and out of an organization.
Ans.
Explanation: Any transaction that does not result either in inflow or outflow of cash is overlooked in the preparation of cash flow statement of any entity.
The three sections of the cash flow statement are: operating activities, investing activities and financing activities. Companies can choose two different ways of presenting the cash flow statement: the direct method or the indirect method.
Final answer: Cash collections from customers do not appear on the statement of cash flows when prepared by the indirect method, which reports adjustments like depreciation and losses to reconcile net income to net cash from operating activities.So the correct answer is option 4) Cash collections from customers.
