Accounting Multiple Choice Question – 10 October 2024

Part of a draft cash flow statement is shown below:

Operating profit   £8,640

Depreciation charges   (£2,160)

Proceeds of sale of non-current assets  £360

Increase in Inventory   (£330)

Increase in accounts payable   £440

The following criticisms of the above extract have been made:

1.Depreciation charges should have been added, not deducted.

2.Increase in inventory should have been added, not deducted.

3.Increase in accounts payable should have been deducted, not added.

4.Proceeds of sale of non-current assets should not appear in this part of the cash flow statement.

Select ONE answer:

1. 2 and 3 only
2. 1 and 4 only
3. 1 and 3 only
4. 2 and 4 only

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Notcorrect
2. Correct
3. Not correct
4. Not correct

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