IAS 7 requires that a note to the accounts shall disclose a reconciliation of cash flows from operating activities to operating profit or loss after income tax as reported in the statement of comprehensive income.The correct adjustments to the operating profit/loss after tax include:
A)add; depreciation expense, gain on sale of plant and equipment, increase in interest payable, increase in inventories.
B)subtract; increase in future income tax benefit, increase in accounts receivable, loss on sale of plant and equipment.
C)add; increase in accounts payable, increase in income taxes payable, increase in deferred taxes payable.
D)subtract; amortisation expense, increase in future income benefit, increase in interest payable.

Question

Quizplus · Accepted Answer

IAS 7 requires adjustments to reconcile cash flows from operating activities to the operating profit or loss. Choice C includes adjustments that add increases in accounts payable, income taxes payable, and deferred taxes payable, which increase the operating profit/loss after tax. The adjustments in choices A, B, and D include some items that are incorrectly included or subtracted from the operating profit/loss after tax.

IAS 7 Requires That a Note to the Accounts Shall