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Basic Question 1 of 9
Which statement is true?
B. Cash flow is measured by a standardized, immutable process, without the assumptions and interpretations that are inherent in the measurement of accrual-based income.
C. Because they can be readily confirmed, the balance in cash at 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 the accountants.
B. Cash flow is measured by a standardized, immutable process, without the assumptions and interpretations that are inherent in the measurement of accrual-based income.
C. Because they can be readily confirmed, the balance in cash at 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 |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
describe indicators of cash flow quality;
evaluate the cash flow quality of a company;
CFA® 2024 Level II Curriculum, Volume 2, Module 15.