When preparing the note attached to the cash flow statement reconciling operating profit with cash flow from operations, which statement is not true?
A) An increase in current liabilities is deducted from profit.
B) A decrease in current assets is added to profit.
C) An increase in current assets is deducted from profit.
D) All of the above are true.

Question

Quizplus · Accepted Answer

An increase in current liabilities is actually added to profit, not deducted, because it represents more cash available to the business (e.g., through delaying payment to suppliers).

When Preparing the Note Attached to the Cash Flow Statement