Multiple choice

4. Just before the finalization of the financial statements for the year ended 30 June 2020, a company experienced a number of material events, including: I on 10 July 2020 the directors decided to close a division of the company at an estimated cost of $2,000,000. II on 10 August 2020 a court decision found the company liable to pay damages of $600,000 to a major customer who had commenced legal action in April 2018. III an independent valuation of property conducted on 20 July 2020 revealed that the directors' valuation included in the 30 June 2020 financial statements was overstated by $700,000. In respect of the events listed above, it will be necessary to adjust the financial statements, by way of general journal entries, for: a b I, II and III. II only, and make a note disclosure for I and III. III only, and make a note disclosure for I and II. II and III only, and make a note disclosure for I. d 5. All the following information is required to be disclosed in a note to the statement of cash flows, except: a b details of the aggregate cash flows arising from the acquisition or disposal of businesses. details of the cash flows arising from the acquisition or disposal of non-current assets. details of non-cash transactions in relation to investing and financing activities if not disclosed elsewhere. an explanation of the composition of cash and cash equivalents including identification of any balances that are not available for use. d 6. a b All of the following are limitations of the statement of cash flows, except: financial ratios based on cash flow data are better at predicting financial distress for companies than other ratios that rely solely on accrual accounting balances it provides past cash flow data, which may not be a good predictor of future cash flows the direct method of determining cash flows from operating activities does not provide industry comparison non-cash transactions and events while relevant to the financial affairs of the entity are excluded from the statement of cash flows. d d