If a company has both an inflow and outflow of cash related to property plant and equipment the
A) two cash effects can be netted and presented as one item in the investing activities section.
B) cash inflow and cash outflow should be reported separately in the investing activities section.
C) two cash effects can be netted and presented as one item in the financing activities section.
D) cash inflow and cash outflow should be reported separately in the financing activities section.

Question

Quizplus · Accepted Answer

Cash inflows and outflows related to property plant and equipment should be reported separately in the investing activities section of the statement of cash flows as they represent items related to the acquisition or disposal of long-term assets. Netting these cash flows could lead to misleading information for investors and stakeholders. Therefore, it is important to report both inflows and outflows separately to give a clear picture of the company's investment activities.

If a Company Has Both an Inflow and Outflow of Cash