Q54 cash flow Ts grewal. Why profit on investment (CR) not taken as non cash items.

Open in App

Solution

Dear Student,
As we know, only items given in adjustments have double/two effects and as the Capital Reserve (profit on sale of investment) is shown in the Balance Sheet it is to be recorded only once. The effect of profit on sale of investment is taken into account while preparing the Investment A/c. Therefore, it is not deducted from Net Profit before taxation and extraordinary items as a non-cash item.

Hope this answers your query.
Keep posting!!

Suggest Corrections

Similar questions

Q. The last item on statement of cash flows prior to the schedule of non-cash investing and financing activities reports _________________.

Cash flow from ___ is an item on the cash flow statement that reports the aggregate change in a company's cash position resulting from investment gains or losses.

Q. starts with net profit & converts it to operating cash flow by adjusting for items that didn't affect cash.

Q. Non cash investing and financing activities which may have significant effect on future cash flow are reported ________________.

Q. Which of the following would not be considered a non-cash investing and financing activity in preparing a statement of cash flows?

Join BYJU'S Learning Program