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 is important for transparency and to provide a complete picture of the company's financial activities. Option A is incorrect because a separate section in the cash flow statement is only used for reporting cash flows, not non-cash transactions. Option B is incorrect because it suggests including all cash investing and financing activities, which is not necessary for transactions that do not impact cash. Option D is incorrect because disclosure of significant non-cash transactions is required by accounting standards.

Occasionally,companies Engage in Important Investing and Financing Activities Which Do