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Which step in the preparation of the statement of cash flows requires the careful analysis of...

Which step in the preparation of the statement of cash flows requires the careful analysis of non-current asset accounts?

all of the above

determining net cash flows from operating activities

determining net cash flows from investing activities

determining net cash flows from financing activities

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Answer #1

Correct answer-----------determining net cash flows from investing activities.

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We analyse the change in balances of non current assets such as property plant and equipment to see if there are any purchase or sale of these assets. Sale of non current asset brings cash which is reported as cash inflow in Investing section of cash flow statement whereas purchase of Non current asset leads to cash outflow (Unless purchased by means other than cash) hence reported as cash outflow.

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