The Change in Working Capital on the Cash Flow Statement should include Current Assets and Current Liabilities, excluding cash and debt, according to…

The Change in Working Capital on the Cash Flow Statement should include Current Assets and Current Liabilities, excluding cash and debt, according to the definition of Working Capital. Why would you include changes in BOTH Current AND Long-Term Deferred Revenue in this section? After all, Long-Term Deferred Revenue is not a Current Asset.

A.You do this because Long-Term Deferred Revenue is related to a company’s core business operations, just like everything else in Cash Flow from Operations, so it belongs there.

B.This is not correct – Long-Term Deferred Revenue should be counted in Cash Flow from Financing instead, because it’s a long-term liability.

C.If you wanted to do this, you should consolidate both the Deferred Revenue line items into a single item on the balance sheet instead.

D.You might do this in order to simplify the statements and save time, but it should really be counted elsewhere.

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