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Preparing CFS-Direct Method

Objective Typ...

Question

Objective Type Questions :
State whether following statements are true or false :

Purchase of fixed asset is operating cash flow.

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Solution

False

Explanation: Purchase of fixed asset is an investing cost for the business. Therefore, it is an investing cash outflow for the business. On the other hand, operating cash flow consists of those activities of business that are related to the operations of the business.

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