Multiple Choice Questions 1. Which of the following cannot be a main objective of a statement of

Question:

Multiple Choice Questions
1. 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 equivalents
2. 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 assets
3. 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 assets
4. 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 paid
5. 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 income
6. 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 expenses
7. Depending on the country, interest expenses are included in either operating activities or investing activities
(a) True
(b) False
8. 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) False
9. Dividends received are usually included in
(a) Operating activities
(b) Investing activities
(c) Financing activities
10. 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 Add any loss on sale of fixed assets
(d) Subtract depreciation expense
(e) Subtract any increase in Accounts Payable
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