Cima C02 Exam Question No 5

Question No 5:

When there is inflation, the historical cost convention has the effect of?

A. Overstating profits and understating statement of financial position values.
B. Understating profits and overstating statement of financial position values.
C. Understating cash flow and overstating cash in the statement of financial position.
D. Overstating cash flow and understating cash in the statement of financial position

Answer: A