In order to derive a statement of cash flows, the owner must add back the _____ to the statement of profit or loss and other comprehensive income.
A)depreciation expense
B)increase in trade receivables
C)increases in inventory
D)decrease in trade and other payables

Question

Quizplus · Accepted Answer

The owner must add back non-cash expenses such as depreciation expense to the statement of profit or loss and other comprehensive income when deriving a statement of cash flows. The other options (B, C, and D) are all changes in working capital that would be used to calculate the cash flow from operating activities.

In Order to Derive a Statement of Cash Flows, the Owner