Question 1

Generally, the dividend payment appearing in the financing section of the statement of cash flows represents:

Accepted Answer

A) interim dividends declared in the current year. 
B) proposed dividends from last year that have been paid, plus any interim dividends declared and paid in the current year. 
C) proposed dividends from last year. 
D) current year's dividend. 
A) interim dividends declared in the current year. 
B) proposed dividends from last year that have been paid, plus any interim dividends declared and paid in the current year. 
C) proposed dividends from last year. 
D) current year's dividend.

Question 2

What is the rule for converting credit sales to cash received from debtors?

Accepted Answer

A) income - accounts receivable at the beginning + accounts receivable at the end = cash received. 
B) income + accounts receivable at the beginning - accounts receivable at the end = cash received. 
C) income + or - accounts receivable at the beginning + or - accounts receivable at the end = cash received. 
D) none of the above. 
A) income - accounts receivable at the beginning + accounts receivable at the end = cash received. 
B) income + accounts receivable at the beginning - accounts receivable at the end = cash received. 
C) income + or - accounts receivable at the beginning + or - accounts receivable at the end = cash received. 
D) none of the above.

Question 3

An extract from the trial balance of RRR Pty Ltd as at 30 June 2018 shows: Income tax expense $20,000
If the income tax provided for at the end 2017 was $12,000 and taxation is paid in arrears in a lump sum, what amount will appear in the statement of cash flows for taxation paid by RRR Pty Ltd for the year ended 30 June 2018?

Accepted Answer

A) $20,000. 
B) $12,000. 
C) $16,000. 
D) Nil. 
A) $20,000. 
B) $12,000. 
C) $16,000. 
D) Nil.

Question 4

Which of these is a reason why a statement of cash flows could show a negative cash flow from operating activities even though the statement of comprehensive income showed a profit?

Accepted Answer

A) An increase in the amount of inventory held. 
B) A decrease in the amount owing by debtors. 
C) An increase in the amount owing by creditors. 
D) An increase in depreciation charged. 
A) An increase in the amount of inventory held. 
B) A decrease in the amount owing by debtors. 
C) An increase in the amount owing by creditors. 
D) An increase in depreciation charged.

Question 5

Wages expense in the income statement is $58,250 with the statement of financial position at the end of the year showing accrued wages of $2,000. If there were no accrued wages at the beginning of the period, how much was paid out in cash for wages during the year?

Accepted Answer

A) $54,250. 
B) $56,250. 
C) $2,000. 
D) $58,250. 
A) $54,250. 
B) $56,250. 
C) $2,000. 
D) $58,250.

Question 6

If the balance of the share capital account is $300,000 at the beginning of the year and $410,000 at the end of the year, and there has been a 1 for 6 bonus issue of shares at the start of the year, the amount that will appear in the statement of cash flows for proceeds from the issue of shares is:

Accepted Answer

A) $360,000. 
B) $300,000. 
C) $410,000. 
D) $60,000. 
A) $360,000. 
B) $300,000. 
C) $410,000. 
D) $60,000.

Question 7

Which of the following is an example of a non-cash investing or financing transaction?

Accepted Answer

A) charging depreciation. 
B) sale of a parcel of shares. 
C) repayment of a loan. 
D) the purchase of a building paid for by an issue of shares direct to the vendor. 
A) charging depreciation. 
B) sale of a parcel of shares. 
C) repayment of a loan. 
D) the purchase of a building paid for by an issue of shares direct to the vendor.

Question 8

Calculate the cash from operating activities using the following information:

Profit $142,000.
Depreciation $46,000.
Accounts receivable increased by $10,000.
Accrued expense increased by $12,000.
Inventory increased by $14,000.

Accepted Answer

A) $176,000. 
B) $186,000. 
C) $165,000. 
D) $200,000. 
A) $176,000. 
B) $186,000. 
C) $165,000. 
D) $200,000.

Question 9

State the effect on profit and cash of depreciating a non-current asset.

Accepted Answer

A) decrease in profit and decrease in cash. 
B) no effect on profit and decrease in cash. 
C) no effect on profit and no effect on cash. 
D) decrease in profit and no effect on cash. 
A) decrease in profit and decrease in cash. 
B) no effect on profit and decrease in cash. 
C) no effect on profit and no effect on cash. 
D) decrease in profit and no effect on cash.

Question 10

Cash received from the issue of shares will appear in which section of the statement of cash flows?

Accepted Answer

A) Investing activities section. 
B) Does not appear in the statement. 
C) Operating activities section. 
D) Financing activities section. 
A) Investing activities section. 
B) Does not appear in the statement. 
C) Operating activities section. 
D) Financing activities section.

Question 11

If the opening balance of rent accrued at the beginning of the year was $1,000, rent expense for the year was $20,000 and the closing balance of rent accrued at the end of the year was $1,200, the amount paid in cash for rent during the year is:

Accepted Answer

A) $22,200. 
B) $21,000. 
C) $20,200. 
D) $19,800. 
A) $22,200. 
B) $21,000. 
C) $20,200. 
D) $19,800.

Question 12

If prepaid interest at the beginning of the period was zero and at the end of the period was $4,000 and interest expense appears in the statement of comprehensive income for the year as $17,300, how much was paid out in cash for interest during the year?

Accepted Answer

A) $13,300. 
B) $21,300. 
C) $17,300. 
D) $4,000. 
A) $13,300. 
B) $21,300. 
C) $17,300. 
D) $4,000.

Question 13

Which of the following would not appear in a statement of cash flows?

Accepted Answer

A) the creation of an allowance for doubtful debts. 
B) the upward revaluation of an asset. 
C) a bonus issue of shares. 
D) all of the above. 
A) the creation of an allowance for doubtful debts. 
B) the upward revaluation of an asset. 
C) a bonus issue of shares. 
D) all of the above.

Question 14

Royal Plastics provides the following information about its moulding machinery: $$\begin{array} { l r } 
\text { Opening balance of machinery account } & \$ 500,000 \
\text { Closing balance of machinery account } & \$ 650,000 \
\text { Depreciation expense for the year } & \$ 50,000 \
\text { Depreciation charged on machinery sold } & \$ 130,000 \
\text { Profit on sale of machinery } & \$ 20,000 \
\text { Carrying value of machinery } & \$ 90,000
\end{array}$$ What is the total cost of machinery purchased during the year?

Accepted Answer

A) $370,000. 
B) $200,000. 
C) $280,000. 
D) $300,000. 
A) $370,000. 
B) $200,000. 
C) $280,000. 
D) $300,000.

Question 15

Calculate cash from operating activities using the following information: Profit $148,000.
Depreciation $40,000.
Inventory increased by $10,000.

Accepted Answer

A) $148,000. 
B) $178,000. 
C) $188,000. 
D) $98,000. 
A) $148,000. 
B) $178,000. 
C) $188,000. 
D) $98,000.

Question 16

When reconciling profit with net cash flow from operating activities:

Accepted Answer

A) subtract increases in current assets and add increases in current liabilities. 
B) add increases in current assets and subtract increases in current liabilities. 
C) add increases in current assets and add increases in current liabilities. 
D) none of the above. 
A) subtract increases in current assets and add increases in current liabilities. 
B) add increases in current assets and subtract increases in current liabilities. 
C) add increases in current assets and add increases in current liabilities. 
D) none of the above.

Question 17

What is the effect on profit and cash of a firm paying a trade creditor?

Accepted Answer

A) Decrease in profit and decrease in cash. 
B) No effect on profit and decrease in cash. 
C) No effect on profit and no effect on cash. 
D) Decrease in profit and no effect on cash. 
A) Decrease in profit and decrease in cash. 
B) No effect on profit and decrease in cash. 
C) No effect on profit and no effect on cash. 
D) Decrease in profit and no effect on cash.

Question 18

Indulgence Chocolates has provided the following information: $$\begin{array} { l r } 
\text { Cost of sales for the year } & \$ 190,000 \
\text { Opening balance of accounts payable } & \$ 50,000 \
\text { Closing balance of accounts payable } & \$ 60,000 \
\text { Opening balance of inventory } & \$ 20,000 \
\text { Closing balance of inventory } & \$ 36,000
\end{array}$$ The cash payments made to suppliers during the year total:

Accepted Answer

A) $184,000. 
B) $164,000. 
C) $196,000. 
D) $200,000. 
A) $184,000. 
B) $164,000. 
C) $196,000. 
D) $200,000.

Question 19

Which of these correctly shows the effect of charging depreciation on equipment for the period?

Accepted Answer

A) Decrease in accumulated depreciation; decrease in the carrying value of equipment. 
B) Increase in accumulated depreciation; increase in the carrying value of equipment. 
C) Increase in accumulated depreciation; decrease in the carrying value of equipment. 
D) None of the above. 
A) Decrease in accumulated depreciation; decrease in the carrying value of equipment. 
B) Increase in accumulated depreciation; increase in the carrying value of equipment. 
C) Increase in accumulated depreciation; decrease in the carrying value of equipment. 
D) None of the above.

Question 20

For The Book Co share capital increased by $200,000 in total over a year in which there was a bonus issue of 20,000 new shares at $2 per share. The cash flow from the issue of shares is:

Accepted Answer

A) $160,000. 
B) $200,000. 
C) $180,000. 
D) $240,000. 
A) $160,000. 
B) $200,000. 
C) $180,000. 
D) $240,000.

Generally, the dividend payment appearing in the financing section of the statement of cash flows represents:

What is the rule for converting credit sales to cash received from debtors?

Which of these is a reason why a statement of cash flows could show a negative cash flow from operating activities even though the statement of comprehensive income showed a profit?

Wages expense in the income statement is $58,250 with the statement of financial position at the end of the year showing accrued wages of $2,000. If there were no accrued wages at the beginning of the period, how much was paid out in cash for wages during the year?

If the balance of the share capital account is $300,000 at the beginning of the year and $410,000 at the end of the year, and there has been a 1 for 6 bonus issue of shares at the start of the year, the amount that will appear in the statement of cash flows for proceeds from the issue of shares is:

Which of the following is an example of a non-cash investing or financing transaction?

Calculate the cash from operating activities using the following information: Profit $142,000. Depreciation $46,000. Accounts receivable increased by $10,000. Accrued expense increased by $12,000. Inventory increased by $14,000.

State the effect on profit and cash of depreciating a non-current asset.

Cash received from the issue of shares will appear in which section of the statement of cash flows?

If the opening balance of rent accrued at the beginning of the year was $1,000, rent expense for the year was $20,000 and the closing balance of rent accrued at the end of the year was $1,200, the amount paid in cash for rent during the year is:

If prepaid interest at the beginning of the period was zero and at the end of the period was $4,000 and interest expense appears in the statement of comprehensive income for the year as $17,300, how much was paid out in cash for interest during the year?

Which of the following would not appear in a statement of cash flows?

Calculate cash from operating activities using the following information: Profit $148,000. Depreciation $40,000. Inventory increased by $10,000.

When reconciling profit with net cash flow from operating activities:

What is the effect on profit and cash of a firm paying a trade creditor?

Which of these correctly shows the effect of charging depreciation on equipment for the period?

For The Book Co share capital increased by $200,000 in total over a year in which there was a bonus issue of 20,000 new shares at $2 per share. The cash flow from the issue of shares is:

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Regulatory Framework for Companies

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Cost-Volume-Profit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

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Exam 6: Measuring and Reporting Cash Flows

Generally, the dividend payment appearing in the financing section of the statement of cash flows represents:

What is the rule for converting credit sales to cash received from debtors?

Which of these is a reason why a statement of cash flows could show a negative cash flow from operating activities even though the statement of comprehensive income showed a profit?

Wages expense in the income statement is $58,250 with the statement of financial position at the end of the year showing accrued wages of $2,000. If there were no accrued wages at the beginning of the period, how much was paid out in cash for wages during the year?

If the balance of the share capital account is $300,000 at the beginning of the year and $410,000 at the end of the year, and there has been a 1 for 6 bonus issue of shares at the start of the year, the amount that will appear in the statement of cash flows for proceeds from the issue of shares is:

Which of the following is an example of a non-cash investing or financing transaction?

Calculate the cash from operating activities using the following information: Profit $142,000. Depreciation $46,000. Accounts receivable increased by $10,000. Accrued expense increased by $12,000. Inventory increased by $14,000.

State the effect on profit and cash of depreciating a non-current asset.

Cash received from the issue of shares will appear in which section of the statement of cash flows?

If the opening balance of rent accrued at the beginning of the year was $1,000, rent expense for the year was $20,000 and the closing balance of rent accrued at the end of the year was $1,200, the amount paid in cash for rent during the year is:

If prepaid interest at the beginning of the period was zero and at the end of the period was $4,000 and interest expense appears in the statement of comprehensive income for the year as $17,300, how much was paid out in cash for interest during the year?

Which of the following would not appear in a statement of cash flows?

Calculate cash from operating activities using the following information: Profit $148,000. Depreciation $40,000. Inventory increased by $10,000.

When reconciling profit with net cash flow from operating activities:

What is the effect on profit and cash of a firm paying a trade creditor?

Which of these correctly shows the effect of charging depreciation on equipment for the period?

For The Book Co share capital increased by $200,000 in total over a year in which there was a bonus issue of 20,000 new shares at $2 per share. The cash flow from the issue of shares is:

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Regulatory Framework for Companies

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Cost-Volume-Profit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

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