Cash Flow Statements and Preparation
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Questions and Answers

What is the purpose of providing information about the cash flows of an enterprise in financial statements?

  • To assess the ability of the enterprise to generate cash and cash equivalents (correct)
  • To assess the ability of the enterprise to invest in new projects
  • To assess the ability of the enterprise to acquire assets
  • To assess the ability of the enterprise to issue dividends

    • What is the main focus of AS 3 'Cash Flow Statements'?

  • Calculating depreciation
  • Recording revenue and expenses
  • Valuing assets and liabilities
  • Classifying cash flows from operating, investing, and financing activities (correct)

    • What does a cash flow statement classify during a specific period?

  • Cash flows from operating, investing, and financing activities (correct)
  • Total revenue and total expenses
  • Changes in equity
  • Net income and net loss

    • Why is it important for users of financial statements to understand an enterprise's ability to generate cash and cash equivalents?

    <p>To make informed economic decisions</p> Signup and view all the answers

    What is the significance of preparing a cash flow statement as per AS 3?

    <p>Providing information about historical changes in cash and cash equivalents</p> Signup and view all the answers

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