7. Statement of Cash Flows

Question 1

Is a financial statement that provides information about the historical changes, inflows and outflows, in cash and cash
equivalents of an entity during the period of operating, investing, and financing activities.

Answer 1

Statement of Cash Flows

Question 2

T/F
Statement of Comprehensive Income assess the ability of the entity to generate cash and cash equivalents, the needs of the entity to utilize those cash flows, and the timing and certainty of their generation.

Answer 2

False ; Statement of Cash flows

Question 3

Excludes movements between items that constitute cash or cash equivalents because these components are part of the _________

Answer 3

cash management

Question 4

T/F

An entity shall prepare a cash flow statement in accordance with the requirement of PAS 7 and present it as an integral part of its financial statement for each period for which financial statements are presented.

Answer 4

True

Question 5

T/F

The statement of cash flows shall report cash (inflows and outflows) during the period classified by operating, investing, and financing activities.

Answer 5

True

Question 6

Three activities included in statement of cash flows

Answer 6

(1) Operating
(2) Investing
(3) Financing

Question 7

Comprises cash on hand and demand deposits

Answer 7

Cash

Question 8

Are short – term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

Held for the purpose of short term commitment

Answer 8

Cash Equivalents

Question 9

Revenue – producing activities.

Key indicator of the extent to which the operations of the entity have generated sufficient cash flows to repay loans, maintain the operating capability of the entity, pay dividends, and make new investments without recourse to external sources of financing.

Answer 9

Operating activities

Question 10

Examples of Cash inflows in the direct method of operating activities

Answer 10

a. Cash collections from customers
b. Dividends received, interest fees and royalties
c. Other operating cash receipts

Question 11

Examples of Cash outflows in the direct method of operating activities

Answer 11

a. Cash payments to suppliers
b. Operating expenses paid
c. Interest paid
d. Income taxes paid

Question 12

T/F

Information about major classes of gross cash receipts and gross cash payments
are disclosed which may be obtained either from accounting records of the entity or by adjusting sales, cost of sales, operating expenses and other income from cash basis to accrual basis.

Answer 12

False ; from accrual basis to cash basis

Question 13

Acquisition and disposal of long – term assets and other investments not
included in cash equivalents.

Answer 13

Investing activities

Question 14

T/F

Cash flows represent the extent to which expenditures have been made for resources intended for general future income and cash flows.

Answer 14

True

Question 15

Result in changes in the size and composition of the contributed
equity and borrowing of the entity.

Answer 15

Financing activities

Question 16

T/F

Cash flows activities between the entity and the shareholders or between the entity and the creditors are classified as investing activities unless otherwise stated.

Answer 16

False ; financing activities

Question 17

T/F

Financing activities can be used in predicting claims on future cash flows by providers of capital to the entity.

Answer 17

True

Question 18

Preferential treatment of dividends received is classified as _______ because they enter in the determination of income and loss.

Answer 18

operating cash flows

Question 19

Alternative treatment of Dividends received may be classified as ______ because they are returns in investment

Answer 19

investing cash flows

Question 20

Preferential treatment of Dividends payment are classified as ______ because they are the cost of obtaining financial resources.

Answer 20

Financing cash flow

Question 21

Alternative treatment of Dividends payment may be classified as _______ in order to assist users to determine the ability of an entity to pay dividends.

Answer 21

Operating cash flows

Question 22

Preferential treatment of Interest received or paid are classified as _______ because they enter into the determination of income or loss.

Answer 22

Operating Cash flows

Question 23

Alternative treatment of Interest paid may be classified as ______ because they are the cost of obtaining financial resources.

Answer 23

Financing cash flow

Question 24

Alternative treatment of Interest received may be classified as ____ because they are return on investments.

Answer 24

Investing cash flows

Question 25

Preferential treatment of Taxes on Income is usually classified as _____.

Answer 25

Operating cash flows

Question 26

Alternative treatment of Taxes on Income may be classified as _____ as appropriate when it is practicable to identify.

Answer 26

Investing or Financing activities