Question

Statement I: Financing activities relate to long term funds or capital of an enterprise.

Statement II: Separate disclosure of cash flows arising from financing activities is important because they represent the extent to which expenditures have been made for resources intended to generate future income and cash flows. 

Choose the correct option from the following: 

Options

• Both Statement I and Statement II are correct

• Both Statement I and Statement II are incorrect.

• Statement I is incorrect and Statement II is correct.

• Statement I is correct and Statement II is incorrect. 

Answer 1

Statement I is correct and Statement II is incorrect.

Explanation:

Since they show the amount of money spent on resources meant to produce future revenue and cash flows, separate disclosure of cash flows resulting from investing activities is crucial.