Which of the Following Factors Does Not Provide the Rationale

question 24

Multiple Choice

Which of the following factors does not provide the rationale for the provision of cash flow information?

• A)a positive cash flow is essential for an entity's financial viability and survival
• B)accrual- based profit always equals cash flow
• C)most financial statement users have an interest in cash flow in terms of the cash returns they can expect from their investments
• D)accrual- based profit does not necessarily equal cash flow

---

Definitions:

Overapplied Manufacturing Overhead

A situation where the allocated manufacturing overhead costs are more than the actual overhead costs incurred.

Debit

An entry recorded on the left side of an accounting ledger that increases an asset or expense account, or decreases a liability or equity account.

Credit

An accounting entry that increases liability or equity accounts, or decreases asset or expense accounts.

Underapplied Manufacturing Overhead

A situation where the actual manufacturing overhead costs are higher than the overhead costs applied to products based on the predetermined overhead rate.