Question

1. Which of the following answers is a reason(s) for reformulating the Balance Sheet. a.Operating cash...

1. Which of the following answers is a reason(s) for reformulating the Balance Sheet.

a.Operating cash flows related to sales are separated from financial and investment decisions

b.It enables more accurate comparison of companies when using liquidity ratios

c.All of the above

2. Reformulating the Income Statement separates operating revenues and expenses from financial and

investment accounts. a. True b. False

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Homework Answers

Answer #1

1. Reformulation of the balance sheet is relating to classification of the financial assets and investment assets along with financial liabilities in order to provide a more clear and accurate picture of the balance sheet and it will help in better comparison analysis and using the liquidity ratio as well.

So it can be said that both the statements are correct.

Correct answer is option (C) All of the above

2. Reformulation of the income statement will be helpful in separating the operating income from the financial income and investment income, so this is also TRUE statement because it will help in providing a better picture of the income and revenue statement.

Given statement is TRUE.

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