S1: In a cash flow statement under Ind AS 7, dividends paid can be classified as either operating or financing activities. S2: Interest paid can be classified as either operating or financing activities. Which statement(s) is/are correct?
Explanation:
Ind AS 7 allows flexibility. Dividends paid can be classified as financing (cash outflow for financing) or operating (to assist in determining cash from operations). Interest paid can be operating or financing. Both are correct.
Explanation:
Prudence ensures conservatism by providing for all foreseeable losses but not anticipating profits. Materiality allows accountants to bypass strict accounting rules for insignificant items. Both are correct.
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