Question

1. Accounting standards:

A. Allow companies to omit the statement of cash flows from a complete set of financial statements if cash is an insignificant asset.
B. Require that companies omit the statement of cash flows from a complete set of financial statements if the company has no investing activities.
C. Require that companies include a statement of cash flows in a complete set of financial statements.
D. Allow companies to include the statement of cash flows in a complete set of financial statements if the cash balance makes up more than 50% of the current assets.
E. Allow companies to omit the statement of cash flows from a complete set of financial statements if the company has no financing activities.

Answer 1

Answer: Option C

Step-by-step explanation: In simple words, accounting standards can be defined as the rules and procedures that specify how and when the accounting transactions will be recorded ion the income statements. These standards are established so that every entity in the market reports in the same manner and also to decrease the scope of fraud or misstatements.

Financial statements refers to the statements that are prepared by an organisation to depict various aspects of the performance and position of the organisation to all the stakeholders.

As per the accounting standards, a complete set of financial statement include income statement, balance sheet, cash flow statement, statement of changes in equity and notes to financial statement.