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Explain why IAS 7 allows some flexibility in the classification of classification of cash flows as...

Explain why IAS 7 allows some flexibility in the classification of classification of cash flows as operating, investing and financing activities. In addition, discuss whether a single approach would hinder or assist investors when computing potential investments across industrial sectors.

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Answer #1

IAS 7 deals with cash flows from operating,finance and investmenting activities.

The basis of showing the cash flows under different activities is for a normal investor is able to understand the easy .so that he has clear idea from what are the sourses the company has for running the business.

So single approach is advisable..as all the activities will placed at one place and it will understand by the common man.since they have minimum knowledge aboutaccounting and finance

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