Under IFRS Firms Are Encouraged to Use the Direct Method

question 36

True/False

Under IFRS firms are encouraged to use the direct method.The result is that firms that follow IFRS rarely use the indirect method of presenting cash flows from operating activities.

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Definitions:

Revenue Recognition Principle

The concept that supports recording revenues when services have been performed or products delivered to customers.

Cash

Money in the form of coins or banknotes held by an individual or organization, readily available for transactions.

Adjusting Entries

Bookkeeping entries executed at the termination of a financial period for the purpose of apportioning earnings and expenses to the actual period they took place.

Balance Sheet Accounts

Accounts appearing on the balance sheet, representing a company's assets, liabilities, and equity at a specific point in time.