Carl cannot use the statement of profit or loss and other comprehensive income as a measure of cash flows because it is calculated on a(n) _______ rather than a(n) _______ basis.
A)annual; cash
B)annual; accrual
C)accrual; cash
D)cash; accrual

Question

Quizplus · Accepted Answer

The statement of profit or loss and other comprehensive income is calculated on an accrual basis, which means it reports revenue earned and expenses incurred even if cash has not been received or paid. Cash flows, on the other hand, only report the actual movement of cash in and out of the business. Therefore, Carl cannot use the statement of profit or loss and other comprehensive income as a measure of cash flows.

Carl Cannot Use the Statement of Profit or Loss and Other