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Basic Question 22 of 22
Which statement is true?
B. Cash flow is measured by a standardized, immutable process, without the assumptions and interpretations inherent in the measurement of accrual-based income.
C. Because they can be readily confirmed, the balance in cash at a period's end and the total change in cash during a reporting period are not prone to misstatement.
A. Cash flow is real and not subject to the vagaries of GAAP or the whims of accountants.
B. Cash flow is measured by a standardized, immutable process, without the assumptions and interpretations inherent in the measurement of accrual-based income.
C. Because they can be readily confirmed, the balance in cash at a period's end and the total change in cash during a reporting period are not prone to misstatement.
User Contributed Comments 2
| User | Comment |
|---|---|
| Inaganti6 | How can you know unless you check the company's bank accounts ? This is really over optimistic I think. Anyone from India who remembers the Satyam scandal knows how imprudent it would be to believe the cash balance is accurate. |
| sshetty2 | In the US at least; publicly traded companies have to release financial statements that have been audited |
Thanks again for your wonderful site ... it definitely made the difference.
Craig Baugh
Learning Outcome Statements
describe presentation choices, including non-GAAP measures, that could be used to influence an analyst's opinion
describe accounting methods (choices and estimates) that could be used to manage earnings, cash flow, and balance sheet items
describe accounting warning signs and methods for detecting manipulation of information in financial reports
CFA® 2024 Level I Curriculum, Volume 3, Module 10.