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CS Executive · Corporate Accounting and Financial Management · Cash Flows

Which statement about the usefulness of historical cash flow information is consistent with Ind AS 7?

Historical cash flow information is often used as an indicator of the amount, timing and certainty of future cash flows. It also helps check past assessments and examine the relationship between profitability and net cash flow, but it does not replace other statements.

  1. AIt is useful only for computing income tax liability
  2. BIt replaces the need for a statement of profit and loss
  3. CIt is often used as an indicator of the amount, timing and certainty of future cash flowsCorrect
  4. DIt shows the market value of the enterprise's net assets

Explanation

Ind AS 7 says historical cash flow information is often used as an indicator of the amount, timing and certainty of future cash flows. It also helps check past assessments of future cash flows. It does not replace the profit and loss statement or show market value.

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