All of the Following Are Limitations of the Statement of Cash

question 18

Multiple Choice

All of the following are limitations of the statement of cash flows, except:

• A) financial ratios based on cash flow data are better at predicting financial distress for companies than other ratios that rely solely on accrual accounting balances.
• B) it provides past cash flow data, which may not be a good predictor of future cash flows.
• C) the direct method of determining cash flows from operating activities is more costly to apply than the indirect method.
• D) non-cash transactions and events while relevant to the financial affairs of the entity are excluded from the statement of cash flows.

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