IFRS GAAP Requirement That a Statement of Cash Flows Be

question 1

Multiple Choice

IFRS GAAP requirement that a statement of cash flows be reported (in one of two standard formats) by all business entities is logical because

• A) Accrual accounting is no longer valid in today's fast paced economy.
• B) Accrual accounting and cash accounting provide different information.
• C) Cash accounting is useless in a world where most transactions involve credit.
• D) The value of a business entity is best described by its cash position after liquidation.

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Definitions:

Forward Contract

A customized contract between two parties to buy or sell an asset at a specified future date at a price agreed upon today.

Forward Rate

An agreed-upon exchange rate for a currency to be exchanged on a specified future date, used in forward contracts.

Discount Rate

A interest rate used to determine the present value of future cash flows.

Option Expense

The cost associated with granting stock options to employees, typically recognized over the vesting period.