CAF-1 · Chapter 14 · Question 12 of 15
Which of the following is a primary advantage of providing a statement of cash flows?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) It enhances the comparability of operating performance by eliminating the effects of different accounting treatments for the same transactions.
Explanation
Cash flow information is less vulnerable to manipulation through accounting policies/estimates, making operating performance more comparable across different entities.
More IAS 7 Statement of Cash Flows MCQs
- Q14Under the indirect method, how is depreciation expense treated when calculating cash generated from operations?
- Q15When preparing a cash flow statement, an entity discovers it has a 45-day treasury bill. How should this be classified?
- Q1Under IAS 7, how are 'cash equivalents' defined?
- Q2Which of the following activities is classified as an 'Operating Activity' under IAS 7?
- Q3How should a company present cash flows arising from taxes on income, unless they can be specifically identified with financing and…