AASB 107 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 income statement.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.
E) None of the given answers.

Question

Quizplus · Accepted Answer

The correct adjustments to operating profit or loss after tax include adding increases in accounts payable, income taxes payable, and deferred taxes payable. This is because these items are included in the operating cash flow calculation but not in the income statement. The other options listed in the answer choices either do not need to be adjusted or are adjusted in the opposite way.

AASB 107 Requires That a Note to the Accounts Shall