Multiple Choice Questions 1 Which of the following cannot

be a #4173
Multiple Choice Questions1. Which of the following cannot be a main objective of a statement of
cash flows?(a) To provide relevant information on the cash receipts and cash payments of an
entity during a given period(b) To explain changes in cash in the same way as the income
statement explains the components that comprise the net income(c) To provide information on
the operating, financing and investing activities of an entity and the effects of those activities on
cash resources(d) To explain the changes in working capital between opening and closing
balance sheets(e) To report on a standardized basis the cash generation and cash consumption
for a period(f) To provide relevant information to users of the cash inflows and cash outflows of
an entity during a reporting period(g) To provide information on the historical changes in cash
and cash equivalents2. Which of the following would not be integrated in the computation of the
cash flow from operating activities?(a) Cash received from customers(b) Cash paid to
suppliers(c) Proceeds from sale of fixed assets(d) Depreciation and amortization(e) Gain on
sale of fixed assets3. Which of the following would not be included in investing activities? (more
than one answer is possible)(a) Repayment of a loan granted to a subsidiary(b) Dividends
paid(c) Purchase cost of fixed assets(d) Depreciation and amortization(e) Gain on sale of fixed
assets4. Which of the following would not be included in financing activities? (more than one
answer is possible)(a) Proceeds from issuance of shares(b) Dividends received(c) Repayment
of debt(d) Issuance of share capital by capitalization of reserves(e) Dividends paid5. When
using the indirect method to compute the operating cash flow, which of the following items will
not be included?(a) Change in inventory(b) Depreciation expense(c) Gain on sale of fixed
assets(d) Cash paid to employees(e) Net income6. When using the direct method to compute
the operating cash flow, which of the following items will not be included?(a) Cash received from
customers(b) Depreciation expense(c) Cash paid to suppliers(d) Cash paid to employees(e)
Cash paid on other operating expenses7. Depending on the country, interest expenses are
included in either operating activities or investing activities(a) True(b) False8. Under IAS 7, bank
overdrafts are reported either as a part of cash equivalents (as negative cash) or as a part of
financing activities(a) True(b) False9. Dividends received are usually included in(a) Operating
activities(b) Investing activities(c) Financing activities10. Which of these stages are included in
the indirect method? (more than one answer is possible)(a) Add any increase in inventory(b)
Subtract any increase in accounts receivable(c) Add any loss on sale of fixed assets(d) Subtract
depreciation expense(e) Subtract any increase in accounts payableView Solution:
Multiple Choice Questions 1 Which of the following cannot be a

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