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Questions and Answers
What is the purpose of providing information about the cash flows of an enterprise in financial statements?
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'?
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?
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?
Why is it important for users of financial statements to understand an enterprise's ability to generate cash and cash equivalents?
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What is the significance of preparing a cash flow statement as per AS 3?
What is the significance of preparing a cash flow statement as per AS 3?
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