Question

In Cash Flow reporting at the point of Sale

A) There is a Gain
B) It depends on the measuring system
C) There is a Loss
D) There is no Loss and no Gain

Answer 1

When considering Cash Flow reporting at the point of sale, the correct answer is D) There is no Loss and no Gain.

Step-by-step explanation:

At the point of sale, cash flow reporting neither shows a gain nor a loss; it simply indicates the exchange of products or services for cash, affecting the company's liquidity.

This is because the cash flow only reflects the movement of money into or out of the business at a given moment, specifically when a sale is made.

At the point of sale, the business is simply exchanging its inventory or services for cash or receivables, which does not inherently create a gain or a loss, but rather affects the liquidity position.

A gain or loss is usually realized at a later stage, and is more appropriately reflected in the income statement after accounting for expenses related to the sale – such as the cost of goods sold or operating expenses – to ascertain the actual financial performance.