Explain Why IAS 7 Requires Disclosures to Be Made About

question 28

Essay

Explain why IAS 7 requires disclosures to be made about non-cash financing and investing activities.

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Definitions:

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Retained Earnings Statement

A financial statement that shows the amounts and causes of changes in retained earnings for a specific period.

Income Statement

A financial report that shows a company's revenues, expenses, and profits or losses over a specific period, detailing its financial performance.

External Reporting

The process of preparing and disclosing financial statements and other information to parties outside the organization.