9. The following questions involve the Cash Flow Statement a) Explain why net profit does not necessarily provide a posi

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9 The Following Questions Involve The Cash Flow Statement A Explain Why Net Profit Does Not Necessarily Provide A Posi 1 (412.29 KiB) Viewed 9 times

9. The following questions involve the Cash Flow Statement a) Explain why net profit does not necessarily provide a positive cash flow. b) Distinguish between the direct method and the indirect method for the Cash Flow Statement. c) Explain why under the indirect method an adjustment needs to be made on net income. d) Describe the type of adjustment that needs to be made on net income for the indirect method and give TWO (2) examples for each type of adjustment. e) The Cash Flow Statement classifies the activities of the entity into operating activities, investment activities and financing activities. For each activity, give TWO (2) examples of transactions involving cash inflows and TWO (2) examples involving cash outflows. I f) En. Lazim, the chairman and majority shareholder of Lekorlas Sdn. Bhd., Has requested your assistance in preparing financial statements for his company for the purpose of bank loan application. The following is the Cash Flow Statement of Lekolas Sdn. Bhd. for the year ended 31 December 2017 that you have provided: