Occasionally, companies engage in important investing and financing activities which do not affect cash. If the amount of the transaction is significant, how should it be disclosed when financial statements are prepared?

Question

Quizplus · Accepted Answer

Investing and financing activities that do not affect cash should be disclosed in a note to the financial statements or in a supplemental schedule. This allows for transparency and clarity in the financial reporting process. They should not be included in the cash flow statement, as this statement is specifically meant to show the inflows and outflows of cash during a period. Including non-cash transactions in this statement could be misleading.

Occasionally, Companies Engage in Important Investing and Financing Activities Which