Question : Why non-cash transactions are ignored while preparing a Cash Flow Statement?
Option 1: Because non-cash transactions do not affect Cash
Option 2: Because non-cash transactions affected cash
Option 3: Because non-cash transactions affected financing activities
Option 4: Because non- cash transactions affected investing activities
Correct Answer: Because non-cash transactions do not affect Cash
Solution : Answer = Because non-cash transactions do not affect Cash
Non-cash transactions are ignored in the Cash Flow Statement because they do not directly involve the inflow or outflow of cash. Instead, they represent transactions that may impact other financial activities but do not affect the cash position of the entity.
Hence, the correct option is 1.
