AASB 107 Requires the Use of the Direct Method of Calculating

question 19

True/False

AASB 107 requires the use of the direct method of calculating cash flows from operating activities.

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Definitions:

Accrual-Based Net Income

The net income of a company calculated based on accrual accounting, recognizing revenues when earned and expenses when incurred, regardless of cash flow.

IntrA-Entity Gains

Profits resulting from transactions within the same entity, often requiring elimination during the consolidation process to avoid inflating earnings.

Initial Value Method

An accounting method where an investment is recorded at its acquisition cost without subsequent adjustment for changes in market value.