Which of the following would NOT appear in a Cash Flow

Solution

A Cash Flow Statement (CFS) only tracks the actual inflow and outflow of cash and cash equivalents. Transactions that do not involve a physical movement of cash are considered Non-Cash Transactions and are excluded from the main body of the CFS, although they may be disclosed in the notes to accounts.    Option B - Acquisition of Assets by issuing Equity Shares: This is a non-cash investing and financing activity. The asset is acquired, and equity increases, but no cash changes hands. Option C - Purchase of Inventory on 90-day credit: This is a credit transaction. An outflow is only recorded when the cash is actually paid to the creditors at the end of the credit period. Kindky note that as per indirect method, any changes in current asset and current liabilities is recorded as operating cashflow. However, in this transaction, the two aspects nullify each other as: ·        The increase in Inventory is deducted. ·        The increase in Creditors is added back. Net Result: These two adjustments cancel each other out. This proves that the credit purchase had zero impact on your cash position.