Why do cash flow statements provide a useful addition to the statement of comprehensive income and statement of financial position of an entity?
A)cash flow statements provide a useful insight into the entities compliance with IASB's regulations
B)cash flow statements provide a useful insight into the entities incomplete transactions,where profit or loss can only be estimated by means of the accruals concept
C)Cash flow statements provide a useful insight into the entities profit margins
D)Cash flow statements provide a useful insight into the entities income

Question

Quizplus · Accepted Answer

Cash flow statements complement the statement of comprehensive income and the statement of financial position by providing insights into the actual cash flows of an entity, highlighting how cash is generated and used. This is particularly useful for understanding transactions that are not fully settled and where the accruals concept (recognizing revenues and expenses when they are incurred, not necessarily when cash is exchanged) is applied, making it possible to estimate profit or loss.

Why Do Cash Flow Statements Provide a Useful Addition to the Statement