Chapter 15

Question 1

What does IAS 7 provide guidance on?

Answer 1

Preparation of a statement of cash flows

Question 2

What is the objective of statement of cash flows?

Answer 2

Provide information on the entity’s changes in cash during the period

Question 3

What basis is the SOPLOCI prepared on?

Answer 3

Accruals basis

Question 4

What does the statement of cash flows enable users of financial statements to do?

Answer 4

Assess liquidity, solvency and financial adaptability of a business

Question 5

What does cash consist of?

Answer 5

Cash in hand and deposits repayable upon demand, less overdrafts

Question 6

What are cash flows?

Answer 6

Inflows and outflows of cash and cash equivalents

Question 7

What are cash equivalents?

Answer 7

Short term, highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value

Question 8

What is included in cash flows from operating activities?

Answer 8

Entity’s principal revenue earning activities and other activities that don’t fall under the other two headings

Question 9

What happens when a subsidiary pays a dividend?

Answer 9

Only share paid to NCI reflected in consolidated financial statements

Question 10

What is cash flows from financing activities?

Answer 10

Activities that change size and composition of entity’s equity and borrowing

Question 11

Where should dividends paid to NCI be disclosed?

Answer 11

Separately from the dividends paid to parent shareholders

Question 12

Where should cash payments to acquire subsidiary be reported?

Answer 12

Separately in the statement of cash flows under investing activities