CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

According to the FASB, which of the following measures do financial statement users find most useful in predicting future cash flows?
A. Cash inflows and outflows
B. Accrual accounting earnings
C. Cash basis earnings
Explanation: Accrual accounting earnings are based on the forward-looking nature of the accrual basis. Since accrual earnings try to match performance with revenue and expense recognition, they tend to do a better job of predicting future cash flows.

User Contributed Comments 1

User Comment
jpducros It seems the recommended Cash Flow statement is the one with the Direct Method, rather than Indirect. After this question, I assume the use of it is not for predicting future cash flows...
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