Question 1

Discuss why Australia moved from a requirement to prepare a statement of sources and application of funds to a statement of cash flows.

Accepted Answer

Move from sources and applications of funds statement to cash flow statement:
- The statement of sources and application of funds showed movements in all asset and liability items in the statement of financial performance,and was criticised as being difficult to interpret
- The move to cash flow statements was partly in response to US and international reporting requirements
- In Australia an added impetus was the economic recession of the early 1990s where company insolvencies increased sharply and demand for a simpler statement documenting cash flow information increased.

Question 2

A company holds $100,000 in a term deposit account as an interest-generating investment.For purposes of the statement of cash flows the term deposit will be classified as:

Accepted Answer

A)  cash equivalent 
B)  investment 
C)  either cash equivalent or investment 
D)  none of the above 
A)  cash equivalent 
B)  investment 
C)  either cash equivalent or investment 
D)  none of the above B

Question 3

The following items must be separately disclosed in a statement of cash flows:

Accepted Answer

A)  interest paid and received 
B)  dividends paid and received 
C)  Both A and B 
D)  No separate disclosure required 
A)  interest paid and received 
B)  dividends paid and received 
C)  Both A and B 
D)  No separate disclosure required C

Question 4

Assets owned by a subsidiary acquired during the year are treated as negative financing cash flows in a consolidated statement of cash flows

Accepted Answer

A) True 
 B)False

Question 5

The issue of shares to purchase non current assets will be disclosed:

Accepted Answer

A)  as a financing activity 
B)  as an investment activity 
C)  as both a financing and investment activity 
D)  in the note disclosure to the statement of cash flows 
A)  as a financing activity 
B)  as an investment activity 
C)  as both a financing and investment activity 
D)  in the note disclosure to the statement of cash flows

Question 6

Cash payments to buy back shares will be classified as:

Accepted Answer

A)  cash flow from operating activities 
B)  cash flow from investing activities 
C)  cash flow from financing activities 
D)  none of the above 
A)  cash flow from operating activities 
B)  cash flow from investing activities 
C)  cash flow from financing activities 
D)  none of the above

Question 7

The purpose of holding a cash equivalent is irrelevant for the classification in the statement of cash flows

Accepted Answer

A) True 
 B)False

Question 8

A company has total sales revenue of $600,000 for a period.The balance of Accounts Receivable was $200,000 at the start of the year and $220,000 at the end of the year.Cash sales amounted to $50,000.Receipts from customers is:

Accepted Answer

A)  $600,000 
B)  $530,000 
C)  $550,000 
D)  $580,000 
A)  $600,000 
B)  $530,000 
C)  $550,000 
D)  $580,000

Question 9

A statement of cash flows can be prepared using:

Accepted Answer

A)  reconstruction of ledgers approach 
B)  formula approach 
C)  spreadsheet approach 
D)  all of the above 
A)  reconstruction of ledgers approach 
B)  formula approach 
C)  spreadsheet approach 
D)  all of the above

Question 10

Cash flows from operating activities can be calculated using:

Accepted Answer

A)  the direct method 
B)  the indirect method 
C)  either the direct or indirect method 
D)  none of the above 
A)  the direct method 
B)  the indirect method 
C)  either the direct or indirect method 
D)  none of the above

Question 11

Cash flows from operating activities is the default classification in a statement of cash flows

Accepted Answer

A) True 
 B)False

Question 12

Why is cash flow from operating activities seen as a performance measure?

Accepted Answer

Cash flows from operating activities as

Question 13

A Ltd acquires 100% of shares of B Ltd for $195,000,financed by an issue of 100,000 x $1.50 shares and $45,000 cash.B Ltd has cash balances of $35,000 at the date of acquisition.A Ltd will record the following in its consolidated statement of cash flows:

Accepted Answer

A)  cash flow from investing ($195,000) 
B)  cash flow from investing ($450,000) 
C)  cash flow from investing ($10,000) 
D)  cash flow from investing ($35,000) 
A)  cash flow from investing ($195,000) 
B)  cash flow from investing ($450,000) 
C)  cash flow from investing ($10,000) 
D)  cash flow from investing ($35,000)

Question 14

Insurance proceeds from the destruction of a factory by fire would be classified as:

Accepted Answer

A)  operating cash flow 
B)  financing cash flow 
C)  investing cash flow 
D)  none of the above 
A)  operating cash flow 
B)  financing cash flow 
C)  investing cash flow 
D)  none of the above

Question 15

The time to maturity is relevant in the classification of cash equivalents

Accepted Answer

A) True 
 B)False

Question 16

In preparing a consolidated statement of cash flows what items can be shown on a net cash flow basis?

Accepted Answer

Net cash flow basis items:
- AASB 107 ge

Question 17

Discuss the treatment of subsidiaries acquired and disposed of in the consolidated statement of cash flows.

Accepted Answer

Treatment of subsidiaries acquired and d

Question 18

Accounting Standard AASB 107 Statement of Cash Flows mandates the provision of cash flow information from operating,financing and investing activities.

Accepted Answer

A) True 
 B)False

Question 19

The classification of an item as a cash equivalent means that changes in the balance:

Accepted Answer

A)  will be disclosed in the statement of cash flows 
B)  will not be disclosed in the statement of cash flows 
C)  may be disclosed at discretion of the entity 
D)  none of the above 
A)  will be disclosed in the statement of cash flows 
B)  will not be disclosed in the statement of cash flows 
C)  may be disclosed at discretion of the entity 
D)  none of the above

Question 20

AASB 107 requires the use of the direct method of calculating cash flows from operating activities.

Accepted Answer

A) True 
 B)False

Discuss why Australia moved from a requirement to prepare a statement of sources and application of funds to a statement of cash flows.

A company holds $100,000 in a term deposit account as an interest-generating investment.For purposes of the statement of cash flows the term deposit will be classified as:

The following items must be separately disclosed in a statement of cash flows:

Assets owned by a subsidiary acquired during the year are treated as negative financing cash flows in a consolidated statement of cash flows

The issue of shares to purchase non current assets will be disclosed:

Cash payments to buy back shares will be classified as:

The purpose of holding a cash equivalent is irrelevant for the classification in the statement of cash flows

A company has total sales revenue of $600,000 for a period.The balance of Accounts Receivable was $200,000 at the start of the year and $220,000 at the end of the year.Cash sales amounted to $50,000.Receipts from customers is:

A statement of cash flows can be prepared using:

Cash flows from operating activities can be calculated using:

Cash flows from operating activities is the default classification in a statement of cash flows

Why is cash flow from operating activities seen as a performance measure?

A Ltd acquires 100% of shares of B Ltd for $195,000,financed by an issue of 100,000 x $1.50 shares and $45,000 cash.B Ltd has cash balances of $35,000 at the date of acquisition.A Ltd will record the following in its consolidated statement of cash flows:

Insurance proceeds from the destruction of a factory by fire would be classified as:

The time to maturity is relevant in the classification of cash equivalents

In preparing a consolidated statement of cash flows what items can be shown on a net cash flow basis?

Discuss the treatment of subsidiaries acquired and disposed of in the consolidated statement of cash flows.

Accounting Standard AASB 107 Statement of Cash Flows mandates the provision of cash flow information from operating,financing and investing activities.

The classification of an item as a cash equivalent means that changes in the balance:

AASB 107 requires the use of the direct method of calculating cash flows from operating activities.

Text Objectives and Introduction to Consolidation

Principles of Consolidation

Fair Value Adjustments and Tax Effects

Intra-Group Transactions

Non-Controlling Interest

Partly-Owned Subsidiaries: Indirect Non-Controlling Interest

Accounting for Joint Arrangements

Accounting for Associates and Joint Ventures: the Equity Method

Translation and Consolidation of Foreign Currency Financial Statements

Segment Reporting by Diversified Entities

Filters

Exam 7: Consolidated Cash Flow Statements

Discuss why Australia moved from a requirement to prepare a statement of sources and application of funds to a statement of cash flows.

A company holds $100,000 in a term deposit account as an interest-generating investment.For purposes of the statement of cash flows the term deposit will be classified as:

The following items must be separately disclosed in a statement of cash flows:

Assets owned by a subsidiary acquired during the year are treated as negative financing cash flows in a consolidated statement of cash flows

The issue of shares to purchase non current assets will be disclosed:

Cash payments to buy back shares will be classified as:

The purpose of holding a cash equivalent is irrelevant for the classification in the statement of cash flows

A company has total sales revenue of $600,000 for a period.The balance of Accounts Receivable was $200,000 at the start of the year and $220,000 at the end of the year.Cash sales amounted to $50,000.Receipts from customers is:

A statement of cash flows can be prepared using:

Cash flows from operating activities can be calculated using:

Cash flows from operating activities is the default classification in a statement of cash flows

Why is cash flow from operating activities seen as a performance measure?

A Ltd acquires 100% of shares of B Ltd for $195,000,financed by an issue of 100,000 x $1.50 shares and $45,000 cash.B Ltd has cash balances of $35,000 at the date of acquisition.A Ltd will record the following in its consolidated statement of cash flows:

Insurance proceeds from the destruction of a factory by fire would be classified as:

The time to maturity is relevant in the classification of cash equivalents

In preparing a consolidated statement of cash flows what items can be shown on a net cash flow basis?

Discuss the treatment of subsidiaries acquired and disposed of in the consolidated statement of cash flows.

Accounting Standard AASB 107 Statement of Cash Flows mandates the provision of cash flow information from operating,financing and investing activities.

The classification of an item as a cash equivalent means that changes in the balance:

AASB 107 requires the use of the direct method of calculating cash flows from operating activities.

Text Objectives and Introduction to Consolidation

Principles of Consolidation

Fair Value Adjustments and Tax Effects

Intra-Group Transactions

Non-Controlling Interest

Partly-Owned Subsidiaries: Indirect Non-Controlling Interest

Accounting for Joint Arrangements

Accounting for Associates and Joint Ventures: the Equity Method

Translation and Consolidation of Foreign Currency Financial Statements

Segment Reporting by Diversified Entities

Filters