Any gain on the sale of non-current assets should be _________ from the net profit and the loss must be _________to the net profit in determining fund from operation?
Correct answer: C. Deducted, Added
- A. Added, Reduced
- B. Added, Added
- C. Deducted, Added
- D. Deducted, Deducted
Explanation
Funds from operations removes non-operating items from accounting profit: a gain on sale of a non-current asset is deducted, while a loss is added back because neither represents operating funds.
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About Financial Statements
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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