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Identify two items that are included in the Statement of Profit and Loss but not included...

Identify two items that are included in the Statement of Profit and Loss but not included in the Cas from Operating Activities and explain why they do not appear as cash from operating activities

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Answer #1

1. Interest paid on long term loan.

It is included in profit & loss statement however it is part of financing activities in cash flow statement. Financing activities results to change in capital or borrowing of organisation.

2. Dividend recieved

It is recorded in profit & lots statement however it is part of investing activities in statement of cash flow. Activities related to investments are recorded in investing activities.

Activities that are principal revenue generation are operating activities. Cash flows from daily operations can be included in it. Interest paid on long term loan and Dividend received are not operating activities although being part of profit & loss account.

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