What Method Does AASB 107 Require for the Reporting of Cash

question 4

Multiple Choice

What method does AASB 107 require for the reporting of cash flows from operating activities and what does it mean for the presentation of this category in the statement of cash flows?

• A) The derivative method is required. This means that the amounts are presented as increases or decreases in balance sheet working capital accounts.
• B) The indirect method is required. This means that the cash flows are presented as accrual amounts from the operating section of the income statement adjusted for non-cash effects.
• C) The direct method is required. This means that the gross cash flows from operating items are presented.
• D) Either the derivative method is required. This means that the amounts are presented as increases or decreases in balance sheet working capital accounts or the direct method is required. This means that the gross cash flows from operating items are presented is permitted.
• E) None of the given answers.

---

Definitions:

Communication

The exchange of information, ideas, or feelings among individuals through various forms such as speech, writing, or symbols.

Emails

Electronic messages sent over a computer network which allow for easy and quick communication.

Documentation

The act of creating documents or records that capture and detail information, processes, or evidence.

Ethnocentrism

The tendency to consider one’s culture superior to others.