Question 2

a. What are the theoretical underpinnings to the preparation of financial statements? (3 marks)

b. What are non-cash expenses and how are they treated when preparing statement of cash flows of a firm? (3 marks)

c. Is there a relevant connection between the three core decisions of finance and the different categorization of cash flows under the statement of cash flows? Explain. (5 marks)

d. Can the equity of a firm be negative? Explain. (2 marks)

e. What is the difference between accruals and cash flows? Explain. (2 marks)