Question 1

Which of the following items is classified as part of 'operating activities' in the Statement of Cash Flows?

Accepted Answer

A)   Depreciation of non-current assets
B)   Receipts from customers from the sale of goods
C)   Bad debts expense
D)   Proceeds from the sale of non-current assets B

Question 2

IAS 7 Statement of Cash Flows, requires that investing and financing transactions that do NOT require the use of cash or cash equivalents should be:

Accepted Answer

A)   excluded from a Statement of Cash Flows
B)   included in a Statement of Cash Flows before operating, investing and financing activities
C)   presented in the Statement of Cash Flows after operating activities and before investing and financing activities;
D)   presented in a Statement of Cash Flows after the operating, investing and financing activities have been presented. A

Question 3

The following cash flow activities are regarded as investing cash flows:

Accepted Answer

A)   income taxes paid
B)   interest paid
C)   acquisition of subsidiary net of cash acquired
D)   proceeds from issue of debentures. C

Question 4

IAS 7 encourages, but does NOT require, the disclosure of:
I the amount of undrawn borrowing facilities that may be available for future operating activities and to settle capital commitments, indicating any restrictions on the use of these facilities
II the aggregate amount of cash flows that represent increases in operating capacity separately from those cash flows that are required to maintain operating capacity
III the amount of the cash flows arising from the operating, investing and financing activities of each reportable segment
IV the name(s) of the entity's bankers

Accepted Answer

A)   I, II and IV
B)   II, III and IV
C)   I, III and IV
D)   I, II and III.

Question 5

Which of the following items must be separately disclosed in the Statement of Cash Flows?
I. Dividends paid
II. Interest received
III. Dividends received
IV. Interest paid
V. Auditor's remuneration paid

Accepted Answer

A)   I, II, III and IV only
B)   II, III and IV only
C)   I, II and V only
D)   II, III, IV and V only

Question 6

During the financial year, Cresswell Limited had a cost of sales amounting to $260 000. Beginning and ending balances of balance sheet related accounts were:
Beginning balance Ending balance
$\blacktriangleright$Inventory $46 000 $55 000
$\blacktriangleright$Accounts Payable $18 000 $26 000
A discount of $2000 for prompt payment was received. The amount of cash paid for goods purchased during the year was:

Accepted Answer

A)   $259 000
B)   $263 000
C)   $275 000
D)   $279 000.

Question 7

Cash flows arising from each of the following activities of a financial institution may be reported on a net basis:
I cash receipts and payments for the acceptance and repayment of deposits with a fixed maturity date
II the placement of deposits with and withdrawal of deposits from other financial institutions
III cash advances and loans made to customers and the repayment of those advances and loans
IV cash receipts and payments for the acceptance and repayment of deposits with no fixed maturity date

Accepted Answer

A)   I , II and IV
B)   II, III and IV
C)   I, III and IV
D)   I, II and III.

Question 8

According to IAS 7 Statement of Cash Flows, which of the following items does NOT fall within the definition of cash?

Accepted Answer

A)   Bank notes and coins
B)   Non-bank bills that are readily convertible to cash
C)   Deposits on the short-term money market with a term of less than 3 months
D)   Accounts receivable

Question 9

Use the following information to answer questions 11 to 13
A company reported the following information for a financial year:
 
-What is the net cash inflow (outflow) from financing activities?

Accepted Answer

A)   $38 000 net cash inflow
B)   $40,000 net cash inflow
C)   $42,000 net cash inflow
D)   $(2000)  net cash outflow.

Question 10

Operating activities on a Statement of Cash Flows are generally associated with:

Accepted Answer

A)   movements in non-current liabilities of an entity
B)   revenues and expenses of an entity
C)   acquisitions of non-current assets of an entity
D)   changes in equity of an entity.

Question 11

Which of the following descriptions best describes cash flows from investing activities? Those activities that relate to:

Accepted Answer

A)   changing the size or financial structure of an entity
B)   altering the composition of the debt of an organisation
C)   the acquisition or disposal of non-current assets
D)   restructuring the working capital components of a business.

Question 12

The following information was extracted from the records of Ustinof Limited
$\blacktriangleright$Opening balance of Equipment, $360 000
$\blacktriangleright$Closing balance of Equipment, $400 000
$\blacktriangleright$Cost of new Equipment, $80 000
$\blacktriangleright$Proceeds from sale of Equipment, $6000 (Cost $40 000; Carrying amount $10 000)
The total cash flows from investing activities is determined as

Accepted Answer

A)   $40 000 cash outflow
B)   $74 000 cash outflow
C)   $76 000 cash outflow
D)   $80 000 cash outflow.

Question 13

Katsis Limited had the following cash flows during the reporting period:
$\blacktriangleright$Purchase of intangibles $30 000
$\blacktriangleright$Proceeds from sale of plant $28 000
$\blacktriangleright$Receipts from customers $832 000
$\blacktriangleright$Payments to suppliers $593 000
$\blacktriangleright$Interest received $17 600
$\blacktriangleright$Income taxes paid $45 500
The net cash flows from operating activities was:

Accepted Answer

A)   $211 100
B)   $239 100
C)   $256 600
D)   $269 100.

Question 14

Brett Limited had a net profit after tax of $850 000 for the financial year. Included in this profit was:
$\blacktriangleright$Depreciation expense of $120 000
$\blacktriangleright$Gain on sale of Investments of $28 000
Also, Accounts Receivable increased by $39 000 and Inventories decreased by $12 000. The cash flow from operating activities during the year was:

Accepted Answer

A)   $731 000
B)   $785 000
C)   $915 000
D)   $969 000.

Question 15

An item or transaction will qualify for classification as a cash equivalent:

Accepted Answer

A)   if it has a remaining term of more than three months but no more than six months
B)   its term to maturity is no greater than twelve months
C)   it has a fixed maturity date of greater than twelve months
D)   only if it has a maturity of less than three months.

Question 16

The components of cash and cash equivalents:

Accepted Answer

A)   may be disclosed at the option of the entity and reconciled to amounts reported in the statement of financial position
B)   must be disclosed and reconciled to amounts reported in the statement of profit or loss and other comprehensive income
C)   must be disclosed and reconciled to amounts reported in the statement of financial position
D)   must be disclosed and reconciled to amounts reported in the statement of changes in equity.

Question 17

During the financial year Sugianto Limited had sales of $42 000. The opening balance of accounts receivable was $9000, and the closing balance was $12 700. Bad debts amounting to $700 were written off during the period. The cash receipts from sales during the year amounted to:

Accepted Answer

A)   $37 600
B)   $39 000
C)   $38 300
D)   $45 700.

Question 18

The following item is classified as a 'financing activity' in the Statement of Cash Flows:

Accepted Answer

A)   interest paid on debentures
B)   cash received from accounts receivable
C)   cash payment on redemption of the company's debentures
D)   cash payment to purchase debentures of another entity.

Question 19

The basis of measurement used in the Statement of Cash Flows is:

Accepted Answer

A)   accrual
B)   cash and cash equivalents
C)   net present value d market value.

Question 20

Warner Limited had the following cash flows during a reporting period:
$\blacktriangleright$Acquisition of subsidiary, net of cash flows $250 000
$\blacktriangleright$Dividends paid $65 000
$\blacktriangleright$Repayment of borrowings $90 000
$\blacktriangleright$Interest paid on borrowings $57 000
$\blacktriangleright$Proceeds from sale of plant $215 000
What is the amount of the cash flows in relation to financing activities of Warner Limited for the reporting period?

Accepted Answer

A)   Net cash inflow $155 000
B)   Net cash outflow $155 000
C)   Net cash inflow $212 000
D)   Net cash outflow $212 000

Exam 19: Statement of Cash Flows