Cash Flow statement

[Mizi]

Which of the following regarding cash flow statements is most likely correct?Cash Flow Statements:
A)Shows cash from in and out of the business and cannot be affected by non-cash transactions unlike income statements
B)Reflected revenue when it is earned rather than when cash colleccted by the company like income statement

The answer is B but can anyone explain to me why a is incorrect.

 

[sglondon]

The answer isn’t B

 

[S2000magician]

The answer could be A, depending on what they mean by “cannot be affected by non-cash transactions”.
I hate questions such as this; the author is trying to be too clever.

 

[Olayeancah]

I would go with option A. Option B seems wrong cos Income Statement uses accrual concept (recognizing revenue when earned rather receipt of cash and expenses when incurred rather paid for)
Cashflow statement recognizes inflow and outflow of cash. Put in another way, movement of cash.
Moreso, Non-cash transactions (like depreciation,exchange of equity for debt) are not reflected in the cashflow statement.
The author is just trying to smart.

 

[morganm7]

I’d say the answer is A) because the statement seems to be fully true where as B) seems to be only half true;
“Reflected revenue when it is earned” - Yes, but ‘paid’ would be a more optimal word than ‘earned’.
“rather than when cash colleccted by the company like income statement” - False. When cash is collected/paid it is reflected in the CFS, this to me reads in a contradicting fashion.
I bloody well hate these sort of worded questions that make you doubt yourself over something simple.