QUESTION

1. Evaluate the usefulness of the statement of cash flows in terms of any four of the qualitative characteristics of useful information suggested by the IASB's conceptual framework.

(12 marks)

2. Discuss with explanations whether the following items are cash, cash equivalents, investing activities or financing:

1. Funds held in a bank account but 70 days' notice is required for withdrawal.

2. A loan from the bank for 40 days for a specific purpose.

3. A 50,000 investment with a bank with 60 days to maturity but the final value is subject to significant risk as it is based on the index.

4. An account held with the bank where withdrawal requires 105 days' notice.

5. An overdraft with the bank which is seen as short term and part of everyday cash flow of the entity.

(10 marks)