Which statement is correct?
A)The statement of comprehensive income and statement of financial position are accrual based and the statement of cash flows is cash based.
B)The statement of comprehensive income, statement of financial position and statement of cash flows are all accrual based.
C)The statement of financial position is accrual based and the income and statement of cash flows are cash based.
D)None of the statements is correct.

Question

Quizplus · Accepted Answer

The statement of comprehensive income and statement of financial position are prepared on an accrual basis, while the statement of cash flows is prepared on a cash basis. This means that the former two statements recognise transactions when they occur, regardless of whether cash has been received or paid, while the latter statement only takes into account actual cash flows during the period.

Which Statement Is Correct