The Current Ratio Takes into Account the Composition of Current

question 189

True/False

The current ratio takes into account the composition of current assets.

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Definitions:

IFRS

International Financial Reporting Standards, a set of global accounting guidelines that provide a common language for business affairs so that company accounts are understandable and comparable across international boundaries.

Direct Method

In cash flow reporting, a method that lists the major categories of gross cash receipts and gross cash payments.

Indirect Method

A technique used in cash flow statement preparation that adjusts net income for the changes in balance sheet accounts to arrive at the cash flow from operating activities.

Cash Flow Statement

A financial report summarizing the total cash income from a company's operational activities and external funding, along with the expenditure on business operations and investments within a specific timeframe.