The conceptual framework for free cash flows separates the balance sheet equation into the following categories:
A) CA + LT A = CL + LT L + SE
B) OA + FA = OL + FL + SE
C) OA + FA = OL + FL + OSE + FSE
D) Non-FA + FA = Non-FL + FL + SE

Question

Quizplus · Accepted Answer

The conceptual framework for free cash flows separates the balance sheet equation into the following categories: 
OA (operating assets) + FA (financial assets) = OL (operating liabilities) + FL (financial liabilities) + SE (shareholders' equity) 
This equation shows that the total assets of a company are made up of operating assets and financial assets, while the total liabilities and equity are divided into operating liabilities, financial liabilities, and shareholders' equity. This separation is important because it helps to determine the cash flows that are directly related to the ongoing operations of the business and the financing activities necessary to support those operations. Therefore, the best choice is B.

The Conceptual Framework for Free Cash Flows Separates the Balance