Which Statement Is Correct

question 37

Multiple Choice

Which statement is correct?

• A) The statement of comprehensive income and the balance sheet are accrual based and the cash flow statement is cash based.
• B) The balance sheet is accrual based and the income and cash flow statements are cash based.
• C) The statement of comprehensive income, balance sheet and cash flow statement are all accrual based.
• D) None of the statements is correct.

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Definitions:

Working Capital Financing Policy

Strategies a company uses to manage and finance its current assets and current liabilities to ensure it has sufficient liquidity to run its operations.

Net Working Capital

Current assets minus current liabilities.

Current Ratio

A financial metric that assesses a firm's capacity to meet immediate liabilities using its current assets.

Cash Conversion Cycle

A metric that shows the time span between a company's outlay of cash and its collection of receivables; a measure of liquidity.