Which of the following factors does not provide the rationale for the provision of cash flow information?
A)a positive cash flow is essential for an entity's financial viability and survival
B)accrual- based profit always equals cash flow
C)most financial statement users have an interest in cash flow in terms of the cash returns they can expect from their investments
D)accrual- based profit does not necessarily equal cash flow

Question

Quizplus · Accepted Answer

Accrual-based profit always equals cash flow is not a factor that provides rationale for the provision of cash flow information. In fact, accrual-based profit does not necessarily equal cash flow, which is why cash flow information is important to understand an entity's actual cash position. The other options (A, C, and D) all provide reasons for why cash flow information is important.

Which of the Following Factors Does Not Provide the Rationale