Mastering Cash Flow: Understanding Galaxy Ltd's Non-Current Assets Addition

What was the cash paid for additions to non-current assets during the year for Galaxy Ltd?

• A. £5,000
• B. £7,500
• C. £10,000
• D. £12,500

Answer: (B)

To find the cash paid for additions to non-current assets during the year for Galaxy Ltd, it is essential to analyze the company’s cash flow statement, specifically focusing on the investing activities section. This section outlines all transactions concerning the purchase and sale of non-current assets. The cash paid for additions to non-current assets typically includes payments made to acquire fixed assets, such as property, plant, equipment, or intangible assets, during the reporting period. This figure is usually derived from both the cash flow statement and any accompanying notes that clarify the details of those transactions. If the chosen answer is £7,500, it likely reflects accurate data collected from the company's financial records, indicating that this amount corresponds to the total cash outflow for the acquisitions during that year. It is essential to ensure that this figure aligns with both the cash flows recorded and any further disclosures in financial statements that confirm the capital expenditure on non-current assets. The other options could represent potential amounts that might relate to other activities or incorrect interpretations of cash flows but are not the actual cash paid for additions during this specific year. Thus, a careful review of the cash flow and related statements is paramount in identifying the correct cash outflow amount for non-current asset additions.

When you’re gearing up for an accounting online program certification test, you might hit a snag with the ins and outs of financial statements. One of the essential concepts involves understanding cash flows, especially when looking at companies like Galaxy Ltd. So, let’s navigate this together – ever wonder how they keep track of cash spent on those big-ticket items?

Take a moment to consider this question: What was the cash paid for additions to non-current assets during the year for Galaxy Ltd? The options included £5,000, £7,500, £10,000, and £12,500, with the correct answer being £7,500. But let's break down how we get to that number.

First off, non-current assets aren’t just a fancy term; they’re big investments like property, equipment, and even intangible assets such as patents. When you see the cash flow statement for Galaxy Ltd, you’ll want to peep at the investing activities section. It’s like the backstage pass to understand where the company spends its money – and isn't it thrilling to see how the numbers add up, just like piecing together a puzzle?

You know what? It’s crucial to examine the cash flow statement closely. Why? Because this section spells out how much cash the company has spent on acquiring fixed assets during the reporting period. Why are these numbers significant, you ask? Well, every penny counts in accounting, and knowing how much was paid helps stakeholders make informed decisions.

Looking at the right figure, like £7,500, means you’re tapping into accurate data from the company’s financial records. This amount represents the total cash outflow for acquisitions in that financial year. If the choice had been different, say £10,000 or £5,000, these numbers might represent other expenditures unrelated to non-current asset additions or misinterpretations of cash flows. And trust me, a little diligence can go a long way in uncovering the truth.

As you prepare for your certification test, keep in mind that financial statements often come with notes – little nuggets of information that clarify what those numbers represent. A detailed review of the cash flow and related statements makes it easier to pinpoint that all-important cash outflow for non-current asset additions.

So, next time you’re knee-deep in financial statements, remember to approach them with curiosity. Each figure has a story to tell, and understanding them not only boosts your exam prep but also builds your foundation as a well-rounded accounting professional. Now go ace that test!