Where the Entity Uses the Direct Method a Note to the Accounts

Where the entity uses the direct method a note to the accounts reconciling cash flows from operating activities to net profit is required because:

A) Complex calculations are required to convert cash-based revenues.
B) Items such as depreciation are only recorded in a cash system and not an accrual system.
C) There is likely to be a disparity between cash flows from operations under IAS 7 and the profits reported in the statement of comprehensive income.
D) The direct method is required under IAS 7.

Correct Answer:

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