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CMA Intermediate · Corporate Accounting and Auditing · Cash Flow Statement

Which statement best reflects the Ind AS 7 principle on how an entity should present its operating, investing and financing cash flows?

An entity presents operating, investing and financing cash flows in a manner most appropriate to its business. Ind AS 7 reasons that classification by activity lets users assess the impact of each activity on financial position and cash, and evaluate the relationships among those activities.

  1. AIn the fixed order and format identical for every entity regardless of business
  2. BIn a manner most appropriate to its businessCorrect
  3. COnly operating flows are shown; others are disclosed in notes
  4. DIn a manner that nets investing flows against financing flows

Explanation

Ind AS 7 says an entity presents cash flows from operating, investing and financing activities in a manner most appropriate to its business. The classification helps users assess the impact of each activity on financial position and cash, and to evaluate relationships among activities.

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