Which Statement Concerning the Interpretation of a Statement of Cash

question 19

Multiple Choice

Which statement concerning the interpretation of a statement of cash flows is incorrect?

• A) The notes to the statement of cash flows are important in interpreting the firm's cash position.
• B) Ways in which cash flows can be manipulated include delaying cash payments and employing finance leases.
• C) It is the indirect method rather than the direct method of preparation that is preferred by the standard setters.
• D) The statement of cash flows as required under IAS 7/AASB 107 only goes some of the way in enabling users to establish the liquidity/solvency position of an entity.

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Definitions:

Crisis Resolution

The process of identifying, confronting, and resolving psychological, social, or economic emergencies, restoring stability and equilibrium.

Favorable Outcome

A result or end-point that is beneficial, positive, or desirable in nature, often in the context of goals, plans, or expectations.

Maslow's Needs

A hierarchy of human needs proposed by Abraham Maslow, suggesting people are motivated to fulfill basic needs before moving on to other, more advanced needs.

Needs Fulfillment

The process of satisfying fundamental human needs, such as those for food, shelter, companionship, and esteem, which are essential for well-being and personal development.