Scribd
Upload
580 views2 pages

CASH FLOW STATEMENTS - Quiz 3

This document contains 18 multiple choice questions regarding the preparation and presentation of cash flow statements in accordance with PAS 7. The questions cover topics such as what qualifies as a cash equivalent, how to report various cash flows using the direct and indirect methods, required disclosures, and classification of activities in the statement of cash flows.

Uploaded by

Jy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
580 views2 pages

CASH FLOW STATEMENTS - Quiz 3

This document contains 18 multiple choice questions regarding the preparation and presentation of cash flow statements in accordance with PAS 7. The questions cover topics such as what qualifies as a cash equivalent, how to report various cash flows using the direct and indirect methods, required disclosures, and classification of activities in the statement of cash flows.

Uploaded by

Jy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

PAS 7 CASH FLOW STATEMENTS

1. Which can qualify as cash equivalent?


a. Equity securities
b. Six-month certificate of deposit
c. Preferred shares with specified redemption date and acquired three months before redemption date
d. One-year treasury bills maturing in three months from balance sheet date.

2. Which of the following cash flows does not appear in a cash flow statement using indirect method?
a. Net cash flow from operating activities c. Cash inflow from sale of equipment
b. Cash received from customers d. Cash outflow for dividend payment

3. In a cash flow statement using the indirect approach for operating activities, an increase in inventory should be
presented as
a. Outflow of cash c. Inflow and outflow of cash
b. Addition to net income d. Deduction from net income

4. Which should not be disclosed in the cash flow statement using the indirect method?
a. Interest paid, net of amounts capitalized
b. Income taxes paid
c. Cash flow per share
d. Dividends paid on preferred stock

5. How should a gain from the sale of used equipment for cash be reported in a cash flow statement using the indirect
method?
a. In investing activities as a reduction of the cash inflow from the sale
b. In investment activities as a cash outflow
c. In operating activities as a deduction from income
d. In operating activities as an addition to income

6. In a cash flow statement, if used equipment is sold at a gain, the amount shown as a cash flow from investing
activities equals the carrying amount of the equipment
a. Plus the gain
b. Plus the gain and less the amount of tax attributable to the gain
c. Plus both the gain and the amount of tax attributable to the gain
d. With no addition or subtraction

7. In a cash flow statement, if used equipment is sold at loss, the amount shown as a cash flow from investing activities
equals the carrying amount of the equipment
a. Less the loss and plus the amount of tax attributable to the loss
b. Less both the loss and the amount of tax attributable to the loss
c. Less the loss
d. With no addition or subtraction

8. On July 1, 2005 ABC Company signed a 20-year building lease that it reported as a finance lease. ABC paid the monthly
lease payments when due. How should ABC report the effect of the lease payments in the financing activities section of
its 2005 cash flow statement?
a. As an inflow equal to the present value of future lease payments at July 1, 2005 less the 2005 principal and interest
payments
b. As an outflow equal to the 2005 principal and interest payments
c. As an outflow equal to the 2005 principal payments only
d. The lease payments should not be reported in the financing activities section

9. Financing activities are the


a. Activities that result in changes in the size and composition of equity capital and borrowings of the enterprise.
b. Acquisition and disposal of long-term assets and other investments not included in cash equivalents.
c. Principal revenue-producing activities of the enterprise.
d. Borrowings and subsequent payments of the borrowings only.

10. Bank overdrafts are


a. Component of cash and cash equivalents if they are repayable on demand and the bank balance often fluctuates from
positive to negative.
b. Investing activities
c. Operating activities
d. Financing activities

11. A company’s wages payable increased from the beginning to the end of the year. Under the direct method, cash paid
for wages would be
a. Salary expense plus beginning wages payable
b. Salary expense plus the increase in wages payable
c. Salary expense less the increase in wages payable
d. The same as salary expense
PAS 7 CASH FLOW STATEMENTS

12. An enterprise’s accounts receivable decreased from beginning to the end of the year. In the cash flow statement using
the direct method, the cash collected from customers would be
a. Sales revenue plus accounts receivable at the beginning
b. Sales revenue plus the decrease in accounts receivable
c. Sales revenue minus the decrease in accounts receivable
d. The same as sales revenue

13. Which of the following information would be added back to the net income when reporting cash flow from operating
activities using the indirect method?
a. Excess of treasury stock acquisition cost over sales proceeds
b. Bond discount amortization
c. Bond premium amortization
d. Extraordinary gain

14. Which of the following information should be disclosed as supplemental information in the cash flow statement?
a. Cash flow per share
b. Conversion of debt to equity
c. Issue of common stock for cash
d. Purchase of treasury stock for cash at more than par value

15. When calculating the estimates of future cash flows for impairment, which of the following cash flows should not be
included?
a. Cash flows from disposal c. Cash flows from the sale of assets produced by the assets
b. Income tax payments d. Cash outflows on the maintenance of the asset

16. In cash flow statement prepared using the direct method, if wages payable increased during the year, the cash paid
for wages would be
a. The same as salary expense
b. Salary expense plus wages payable at the beginning of the year.
c. Salary expense plus the increase in wages payable from the beginning to the end of the year
d. Salary expense less the increase in wages payable from the beginning to the end of the year.

17. Cash equivalents would not include short-term investments in


a. Money market funds b. Available for sale securities
c. Commercial paper d. Certificates of deposit

18. Which of the following is true?


a. The American standard requires dividends paid to be classified as an operating activity.
b. The American standard requires interest paid to be classified as financing activity.
c. The American standard allows dividends paid to be classified as an operating activity or as a financing activity
d. The international accounting standard allows dividends paid to be classified as an operating activity or as a financing
activity.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy