Identify the correct statement below.
A) Bank overdrafts are classified as long-term loans in Australia.
B) Commitments are disclosed on the statement of comprehensive income because they affect net profit but not cash flow.
C) Finance leases are accounted for as if the leased items had been purchased.
D) The expense associated with operating leases is reported on the cash flow statement under the category of investing activities.

Question

Quizplus · Accepted Answer

Finance leases are accounted for as if the leased items had been purchased, which means that they are recorded on the balance sheet as assets and liabilities. Bank overdrafts are classified as current liabilities in Australia. Commitments are disclosed in the notes to the financial statements but not on the statement of comprehensive income. The expense associated with operating leases is reported on the cash flow statement under the category of operating activities.

Identify the Correct Statement Below