The purpose of the income statement is to: To give a detailed breakdown of key items shown in the plimary ﬁnancial statements Show where the business’s cash has come from and where it has been spent Show the revenues, expenses and operating proﬁt for the ﬁnancial year )- Show, at a particular date, the sources of funds provided to a business by shareholders
and others and how these funds have been used \
\ \. 3.. What is the best deﬁnition of a noncurrent asset? Q An asset intended for use on a continuing basis in the company’s activities K: An asset purchased for resale ‘. Expenditure made to fulﬁll a revenue obligation ‘. 24 months One month k.) Six months 5. What is the principal purpose of charging depreciation on non—current assets? r To ensure that sufﬁcient funds are available to replace the assets \) .[_._‘. To comply Iwith the fundamental concept of prudence
6. Where would ‘changes in accounts payable’ most likely appear on a cash ﬂow statement? .\ .I’ Under cash ﬂows from ‘operaﬁng activities’ and ‘investing acﬁvities’ .\ .3′ Under cash ﬂows fmrn ‘investing activities’
..‘. Under cash ﬂows from ‘operaﬁng activities’ .\ Under cash ﬂows from ‘investing acﬁvities’ and ‘financing activities’
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