When preparing the note attached to the statement of cash flows reconciling operating profit with cash flow from operations, which statement is not true?
A)An increase in current assets is deducted from profit.
B)A decrease current assets is added to profit.
C)An increase in current liabilities 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. This is because an increase in current liabilities indicates that a company has more obligations that it has not yet paid for, effectively increasing its cash position in the short term.

When Preparing the Note Attached to the Statement of Cash