Which of the following is a true statement? Liquidity is the ability of the firm
ID: 2590617 • Letter: W
Question
Which of the following is a true statement?
Liquidity is the ability of the firm to adapt to new situations and opportunities.
Cash flow measurement is more uniform than income measurement.
The current-noncurrent classification system in the balance sheet is a good guide to liquidity.
The balance sheet gives insight into the cash-generating potential of operations.
Liquidity is the ability of the firm to adapt to new situations and opportunities.
Cash flow measurement is more uniform than income measurement.
The current-noncurrent classification system in the balance sheet is a good guide to liquidity.
The balance sheet gives insight into the cash-generating potential of operations.
Explanation / Answer
Answer is Option (B). Cash flow measurement is more uniform than income measurement.
Because,
A company not generating the same amount of cash as competitors is bound to lose out when times get rough. And even a company that is shown to be profitable according to accounting standards can go under if there isn't enough cash on hand to pay bills. Therefore cashflow measurement is more uniform.
Rest other statements are false.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.