ACCA Financial Reporting (F7) Practice Exam

Which of the following is NOT a primary component of single entity financial statements?

1. Statement of Financial Position

2. Statement of Profit or Loss and Other Comprehensive Income

3. Cash Flow Statement

4. Statement of Changes in Equity

The correct answer is: Cash Flow Statement

The correct answer identifies the Cash Flow Statement as not being a primary component of single entity financial statements. In the context of financial reporting, primary components typically include the Statement of Financial Position, the Statement of Profit or Loss and Other Comprehensive Income, and the Statement of Changes in Equity. The Statement of Financial Position provides a snapshot of an entity's assets, liabilities, and equity at a specific point in time. The Statement of Profit or Loss and Other Comprehensive Income details the revenues, expenses, and total comprehensive income over a period, showing how the entity performs operationally. The Statement of Changes in Equity reflects movements within equity over the reporting period, including owners' investments, distributions, and retained earnings. While the Cash Flow Statement is an important part of a complete set of financial statements and provides insights into the liquidity and cash management of the entity, it is not classified as a primary component for single entity financial statements as per many financial reporting frameworks. Some frameworks or guidance may consider it supplementary or secondary to the primary statements listed.