Under IAS 1, Presentation of Financial Statements, Which of the Following

question 15

Multiple Choice

Under IAS 1, Presentation of Financial Statements, which of the following is NOT a criterion in the definition of a current liability?

• A) It is a liability that is expected to be settled in an entity's normal operating cycle.
• B) It is a liability primarily held for the purpose of trading.
• C) It is a liability that does not have the right to defer until 18 months after the balance sheet date.
• D) It is a liability that is expected to be settled within 12 months of the balance sheet date.

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Definitions:

Initial Outlay

The upfront expenditure necessary to initiate a project or investment.

Incremental Cash Flows

The additional cash flow generated by a company as a result of a decision to undertake a new project or investment.

Capital Budgeting

The process by which a business evaluates and selects long-term investments that are worth more than the cash they cost.

Sunk Costs

Costs that have been incurred and cannot be recovered, not affecting future business decisions.