As part of the objective of general-purpose financial reporting, there is an emphasis on "assessing cash flow prospects." Under International Financial Reporting Standards (IFRS) this is interpreted to mean:
A) Cash basis accounting is preferred over accrual based accounting.
B) Information about the financial effects of cash receipts and cash payments is generally considered the best indicator of a company's present and continuing ability to generate favorable cash flows.
C) Over the long run, trends in revenues and expenses are generally more meaningful than trends in cash receipts and disbursements.
D) All of the choices are correct regarding "assessing cash flow prospects" under IFRS.

Question

Quizplus · Accepted Answer

Under IFRS, assessing cash flow prospects involves understanding trends in revenues and expenses over the long run, as they provide a more meaningful insight into a company's ability to generate cash flows than just looking at cash receipts and disbursements.

As Part of the Objective of General-Purpose Financial Reporting, There