Question

What is the treatment of preliminary expenses in cash flow statement?

Answer 1

Answer:

Thus, while preparing a cash flow statement by indirect method, preliminary expenses are added back to net profit before taxation and extra-ordinary items under operating activities. No treatment for preliminary expenses is required if cash flow statement is prepared by direct method.

Explanation:

Answer 2

By indirect method, preliminary expenses are added back to net profit before taxation and extra-ordinary items under operating activities. No treatment for preliminary expenses is required if cash flow statement is prepared by direct method.

This is when we prepares cash flow statement.

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