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

If the transaction is significant but does not affect cash, it should be disclosed in a note to the financial statements or in a supplemental schedule to provide additional information to users of the financial statements. This allows for transparency and clarity in the financial reporting. Choosing option A or B would not be appropriate as it does not accurately reflect the nature of the transaction. Option D is incorrect as all significant transactions should be disclosed in some manner in the financial statements.

Occasionally, Companies Engage in Important Investing and Financing Activities Which