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Which of the following statement(s) is/are true? (Select the correct answe from the options below the statements) (1) Cash flow is of vital importance to the survival/health of a business (2) Revenue and cash are not the same (3) Revenue and cash are the same (1) only (1) and (2) (1) and (3) (2) and (3)

Question

Which of the following statement(s) is/are true? (Select the correct answe
from the options below the statements)
(1) Cash flow is of vital importance to the survival/health of a business
(2) Revenue and cash are not the same
(3) Revenue and cash are the same
(1) only
(1) and (2)
(1) and (3)
(2) and (3)

Which of the following statement(s) is/are true? (Select the correct answe from the options below the statements) (1) Cash flow is of vital importance to the survival/health of a business (2) Revenue and cash are not the same (3) Revenue and cash are the same (1) only (1) and (2) (1) and (3) (2) and (3)

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PhilippaMaster · Tutor for 5 years

Answer

(1) and (2)

Explain

## The statements here revolve around the core concept of cash flow and the distinction between revenue and cash in a company's finances. We need to analyze each statement to determine its validity.<br /><br />## Statement (1) aptly highlights one of the crucial finance maxims that cash flow is critical for the mere survival, let alone the health of a business. The lifeblood of a company, cash flow aids in handling routine expenses and profits, fuel growth, and ensure smooth business functions. Therefore, statement (1) is true.<br /><br />## Statement (2) enlightens that revenue and cash are not the same - an accurate perspective in financial comprehension. Broadly, revenue refers to the funds incurred through business functions, stems from several sources, and is recognized when the earning process is complete. In contrast, cash is part of revenue and indicates funds readily available for use - implying a particular share of revenues therefore met the criteria for ready liquidation. As a result, the two financial constructs, while interlinked, are certainly not the same. So, statement (2) is also true.<br /><br />## Contrarily, statement (3) misconceives that revenue and cash are the same - a falsehood resulting from lack of proper financial knowledge. As elucidated before, the illustration of revenues and cash differs. Thus, statement (3) is not correct.<br /><br />## Thus, concluding from the above, both statement (1) and (2) are correct.
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