» ygsttN 60-12 Multiple choice (PAS 7) Q rimary purpose of a statement of ‘ S Th Telovant information about. “a*t Hows is to P pifferences between net income and associ preipts and disbursements a p. Anentity’s ability to generate positive net cash flows ¢. The cash receipts and cash disbursements of an entity during a period 4. An entity's ability to meet cash operating needs Cash receipts from royalties and commissions are ® 4, Cash outflows for operating activities b, Cash inflows from operating activities c. Cash inflows from investing activities 4, Cash outflows for financing activities 4, Cash flows arising from trading securities are a. Classified as operating activities b. Classified as investing activities c. Classified as financing activities d. Not reported in the cash flow statement. 4. Cash payments to acquire equity instruments are a. Cash outflows for financing activities ». Cash inflows from investing activities c : c. Cash outflows for investing activities d. Cash inflows from financing activities 4 5. Cash receipts from issuing shares are | 8. Cash inflows from investing activities © b. Cash outflows for investing activities ©. Cash inflows from financing activities 4. Cash outflows for financing activities ' 715 Beamscaner2 Interest payments to lenders are classified ag a, Operating activities b, Borrowing activities c. Lending activities d. Financing activities a . Dividend payments to shareholders are classified a, a. Cash outflows for investing activities b. Cash inflows from investing activities c, Cash inflows from financing activities d. Cash outflows for financing activities 2 Interest received and dividend received may be clag, alternatively as cash flow from Classiieg a. Operating activities b. Investing activities c. Financing activities d, Revenue activities © |. Bank overdrafts that are repayable on demand and the beak balance often fluctuates from positive to overdrawn shall be classified as a. Operating activities b. Investing activities c. Financing activities d. .Component of cash and cash equivalents 10. Cash advances and loans made by a financial institution are usually classified as a. Operating activities b. Investing activities c. Financing activities 4. Component of cash and cash equivalents ANSWER 60-12 sae Ba Be na 94 58 4c 6. a 8. b 10. 4 716 CamScanner_p0X 60-3 Multiple choice (IFRS) uF ou ghean bo classified as cash and cash equivalents, except ‘A ed mable proference shares due in 60 da | BeStny bills due for repayment in 90 days | Deby investments { nk overdraft Ba Aba "classification of the cash flow arising from the Which “from an earthquake disaster. settlement would be / ee oa appropriate? * Cash flows from operating activities % Cash flows from investing activities » Gish flows from financing activities 4, Does not appear in the statement of cash flows Under IFRS, an entity can report finance costs in the statement of cash flows a, Inoperating activities b. Either in operating activities or financing activities | ¢ In financing activities 4. In investing activities or financing activities oS 4, Under IFRS, the dividend received from share investments eam be classified as a. Hither an operating activity or a financing activity b. Either an operating activity or investing activity ¢. Only as an investing activity | d. Only an operating activity 5. Cash advances and loans from bank overdraft should afeported in the statement of cash flows as ‘8. Operating activities b. Investing activities ©. Financing activities 4. Other significant noncash activities | Sswer 60-18 Mie ge 3. b 4b aac 7 BeomscamerQUESTION 60-14 Multiple choice (AICPA 4 ep ) 1. How should a gain from sale of equipment for cash be in a statement of cash flows using the indirect metho a. In investing activities a8 a reduction ofthe gay sale b, Prinvesting activities as a cash outflow c. In operating activities as a deduction from income d. In operating activities as an Addition to income c p Howr should a loss on sale of machinery be presente: statement of cash flows using indirect method? “ing a. A deduction from net income b. An addition to net income c. An inflow and outflow of cash d. An outflow of cash In a statement of cash flows using indirect approach fe operating activities, an increase in inventory is presented xe a. Outflow of cash b. Inflow and outflow of cash c. Addition to net income d. Deduction from net income » = Supplemental disclosures required only when the statement of cash flows is prepared using the indirea method include a. A schedule reconciling net income with net cash flovs from operating activities. b. Amounts paid for interest and taxes. ¢, Amounts deducted for depreciation and amortization. d. Significant noncash investing and financing activities. 5. Which of the following should not be disclosed in the c Statement of cash flows using the indirect method? a. Interest paid b, Income taxes paid ©. Cash flow per share d. Dividends paid on Preference shares 718 Bronscannertement of cash flows, which of the followi a iy ported ‘as a cash flow from financing ane © payment to retire mortgage note % sauerest payment on mortgage note be poe gend payment pividet to retire mort i Payment to retire gage note and dividend payment tement of cash flows, depreciation is treated as an 1 Ie ment to net income because depreciation Joa direct source of cash t Reduces income but does not involve cash outflow 5. Peuoes net income and involves an inflow of cash Js an inflow of cash for replacement of asset & 4 Ina statement of cash flows using indirect method, a 8 erease in propaid expenses is a. Reported as an outflow and inflow of eash OF Reported as an outflow of cash ¢. Deducted from net inocme 4, Added to net income ds received from an equity investee should be 4, Dividen din the statement of cash flows as presente s. Deduction from cash flows from operating activities b. Addition to cash flows from investing activities ¢. Addition to cash flows from operating activities d. Deduction from cash flows from investing activities 10 What is the treatment of a three-month treasury bill? A 4, Not reported b. An outflow for financing activities ¢. An outflow for lending activities 4. An outflow for investing activities ANSWER 60-14 | fC ie Bed re S842) oI Bron cede e PER aed eg gee ga eee ng BcomscamerQUESTION 60-15 Multiple choice (Alce, 1. Ina statement of a gain, the amount shown 23 ‘quipment ig wa Activities equals the carrying amin’ from ing & Plus the gain zm Plus the gain and less the amount Flug both the gain andthe amount ute 4. With no addition or subtract. 2. Ina statement of cash flows, if used equin loss, the amount shown as a ont inner i ol © Aetivities equals the earryin a ig amount of the eauipme te a. Less the loss and the amount of tax b. Less both the loss and the amount of tax c. Less the loss d. With no addition or subtraction cash flows, i An entity's wages pa: yable increased. Under 4 method, the cash paid for wages would be n°" B® dire a. Salary expense plus beginning wages payable b. Salary expense plus the increase in wages payable ¢: Salary expense less the increase in wages pate d. The same as salary expense 4. An entity's accounts receivable decreased. Inthe statement of cash flows, the cash collected from customers would be a. Sales revenue plus beginning accounts receivable 8b. Sales revenue plus the decrease in accounts receivable ¢. Sales revenue less the decrease in accounts receivable d. The same as sales revenue a How should an entity report the effect of the finance lease payment in the financing activities section of the © statement of cash flows? a. An inflow equal to the present value of future lesee payment less principal and interest, payment Z . An outflow equal to the principal and interest paym An outflow equal to the principal payment only |. The lease payment should not be reported . Bes 720 CamScannerof the following could potentially be i i 6. Miser operating ot investing cash flo, case ee terest received & Tividend received es paid specifically identified with investi ‘ Taxes pa a p¢ with investing o Making and collecting loans are 8 4. Operating activities b. Investing activities c, Financing activities a, Liquidity activities 8, Which is presented under cash flows from investing activities? a, Employee costs b. Property revaluation , c, Redemption of debentures : 4, Development costs capitalized in the period | 9, Noncash investing and financing activities are : © a. Reported only if the direct method is used. b. “Reported only if the indirect method is used. c. Disclosed in a note or separate schedule accompanying the statement of cash flows. 4. Not reported. 10, An entity purchased a building and paid partly in equity shares and partly in debentures. The transaction shall be © treated as which of the following? a. The purchase of the building is investing and the issuance of shares and debentures is financing. b. The purchase of the building is investing and the 4 issuance of shares and debentures is not reported. 1 ©. The transaction shall be disclosed only in the notes. 4. The transaction shall be ignored totally. ANSWER 60-16 | la B50, Boe 1b % © Be 6 a 8. a 10. © 721 BonscannerQUESTION 60-16 Multiple choice (LAA) eas o 3% = . Which statement about ent of cash flows using the ing; het aring a statement of y indie inied, the amortization of patent is reported a, ct 7 investing activities, crease in cash flows from investing activities, f Realueton in sash flows from invosting activities, c. Increase in eash flows from operating activities, @. Reduction in cash flowe from operating activitics, When preparing a statement of cash flows using the qj method, amortization of goodwill is direct a. An increase in eash flows from operating activities, b. A reduction in cash flows from operating activities, c. Disclosed as a noncash transaction. a. Not reported in the statement of cash flows, The amortization of bond discount related to long-term debt is presented in statement of cash flows Prepared ag a. Inflow and outflow of cash b. Outflow of cash c. Deduction from net income a. Addition to net income . The amortization of a bond premium related to long-term debt is presented in statement of cash flows as a. A positive adj ijustment to net income , b. Cash outflow from investing activities. © Cash outflow from financing activities, d. A negative adjustment to net income. t the method of preparing the statement of cash flows is true? a. The indirect method Starts with income before tax. fhe direct method ie also the recosedietees sethod & The direct method is more consisterrrute the primary Purpose of the st: ‘atement, - 4. All of these statemente sre = a 722, CamScanner© 6 activities Are always equal b. Are calculate b. Are #4 expenses, Can be cal deducting statement Can be c deducting c. et statement that affect cant’ ies . Under indizect method, jg 1. foreign currency transaction ould . As an inflow b Teehould oe ¢. It should be d. Asa deduction foe! 8. Which of the fol D a ayments, b. aA da. flow C9. The statement a. The net ch: cash & ‘The free a. Under indirect leulated } from net in’, that do ‘ose items in the income aloulated bye cash, low cash flows Prepared The major cla: e amount of incom: reconciliation of ions, reconciliation from operations, method, cash flows from operating t0 accrual accounting i x unting income, 88 the difference etwas revenue and appro t indgmeyfoPtiately adding to or 2PPropriately adding to or ae ‘hose items in the income an’ unrealized ‘in on sented? Sain Under financing acvtiviti A inci ities GRoTed ag it is an wy i i | iets in notes Utealized gain t income , ‘ing is not disclosed i the under the direct method?" Teceipts e taxes paid, net income to net cash flow from ‘tement of Sses of gross cash and gross cash of ending retained earnings to net cash of cash flows reports all, except tions during the period. cash flow: generated during Investing transactions. © 10. Free cash flow is calcula operating activities less the period. ted as net cash provided by &. Capital expenditures c i depreciation Gividends and depression aie Capital expenditures and depreciation ANSWER 60-16 le 3. d 2a 4.4 s a %e &-c 8d 10. ¢ ™ CamScanner