Deck 20: Statement of Cash Flows

Question 1

Use the following information to answer questions
A company reported the following information for a financial year:
$\begin{array}{lr}\text { Profit from ordinary activities before incometax expense } & 72,000 \\\text { Income tax expense } & 20,000 \\\text { Depreciation expense } & 8,000 \\\text { Issue of shares } & 40,000 \\\text { Loan made to another company } & 6,000 \\\text { Increase in accounts receivable } & 1,000 \\\text { Decrease in inventories } & 2,000 \\\text { Cash received from loans receivable } & 4,000 \\\text { Dividends paid } & 2,000\end{array}$

-What is the net cash inflow (outflow) from investing activities?

A) $2000 net cash inflow
B) $6000 net cash inflow
C) $(2000) net cash outflow
D) $(4000) net cash outflow.

Answer 1

$(2000) net cash outflow

Question 2

Which of the following items would be presented in a Statement of Cash Flows?

A) Payment of dividends through a share investment scheme
B) Acquisition of an investment in a subsidiary for consideration consisting of an exchange of non-current assets and liabilities
C) Proceeds from the issue of debentures
D) Refinancing of long-term debt

Answer 2

C

Question 3

Katsis Limited had the following cash flows during the reporting period:
? Purchase of intangibles $30 000
? Proceeds from sale of plant $28 000
? Receipts from customers $832 000
? Payments to suppliers $593 000
? Interest received $17 600
? Income taxes paid $45 500

The net cash flows from operating activities was:

A) $211 100
B) $239 100
C) $256 600
D) $269 100.

Answer 3

$211 100

Question 4

Warner Limited had the following cash flows during a reporting period:
Acquisition of subsidiary, net of cash flows $250 000
Dividends paid $65 000
Repayment of borrowings $90 000
Interest paid on borrowings $57 000
Proceeds from sale of plant $215 000
What is the amount of the cash flows in relation to financing activities of Warner Limited for the reporting period?

A) Net cash inflow $155 000
B) Net cash outflow $155 000
C) Net cash inflow $212 000
D) Net cash outflow $212 000

Question 5

AASB 107 Statement of Cash Flows, requires that investing and financing transactions that do NOT require the use of cash or cash equivalents should be:

A) excluded from a Statement of Cash Flows
B) included in a Statement of Cash Flows before operating, investing and financing activities
C) presented in the Statement of Cash Flows after operating activities and before investing and financing activities;
D) presented in a Statement of Cash Flows after the operating, investing and financing activities have been presented.

Question 6

The following information was extracted from the records of Ustinof Limited
Opening balance of Equipment, $360 000
Closing balance of Equipment, $400 000
Cost of new Equipment, $80 000
Proceeds from sale of Equipment, $6000 (Cost $40 000; Carrying amount $10 000)
The total cash flows from investing activities is determined as

A) $40 000 cash outflow
B) $74 000 cash outflow
C) $76 000 cash outflow
D) $80 000 cash outflow.

Question 7

The following cash flow activities are regarded as investing cash flows:

A) income taxes paid
B) interest paid
C) acquisition of subsidiary net of cash acquired
D) proceeds from issue of debentures.

Question 8

Operating activities on a Statement of Cash Flows are generally associated with:

A) movements in non-current liabilities of an entity
B) revenues and expenses of an entity
C) acquisitions of non-current assets of an entity
D) changes in equity of an entity.

Question 9

Use the following information to answer questions
A company reported the following information for a financial year:
$\begin{array}{lr}\text { Profit from ordinary activities before incometax expense } & 72,000 \\\text { Income tax expense } & 20,000 \\\text { Depreciation expense } & 8,000 \\\text { Issue of shares } & 40,000 \\\text { Loan made to another company } & 6,000 \\\text { Increase in accounts receivable } & 1,000 \\\text { Decrease in inventories } & 2,000 \\\text { Cash received from loans receivable } & 4,000 \\\text { Dividends paid } & 2,000\end{array}$

-What is the net cash inflow from operating activities?

A) $45 000
B) $59 000
C) $60 000
D) $61 000.

Question 10

Which of the following items must be separately disclosed in the Statement of Cash Flows?
I) Dividends paid
II) Interest received
III) Dividends received
IV) Interest paid
V) Auditor's remuneration paid

A) I, II, III and IV only
B) II, III and IV only
C) I, II and V only
D) II, III, IV and V only

Question 11

The following item is classified as part of 'investing activities' in the Statement of Cash Flows:

A) depreciation of non-current assets
B) interest received from investments
C) acquisition of non-current assets
D) proceeds from an issue of shares.

Question 12

Use the following information to answer questions
A company reported the following information for a financial year:
$\begin{array}{lr}\text { Profit from ordinary activities before incometax expense } & 72,000 \\\text { Income tax expense } & 20,000 \\\text { Depreciation expense } & 8,000 \\\text { Issue of shares } & 40,000 \\\text { Loan made to another company } & 6,000 \\\text { Increase in accounts receivable } & 1,000 \\\text { Decrease in inventories } & 2,000 \\\text { Cash received from loans receivable } & 4,000 \\\text { Dividends paid } & 2,000\end{array}$

-What is the net cash inflow (outflow) from financing activities?

A) $38 000 net cash inflow
B) $40,000 net cash inflow
C) $42,000 net cash inflow
D) $(2000) net cash outflow.

Question 13

The following item is classified as a 'financing activity' in the Statement of Cash Flows:

A) interest paid on debentures
B) cash received from accounts receivable
C) cash payment on redemption of the company's debentures
D) cash payment to purchase debentures of another entity.

Question 14

Brett Limited had a net profit after tax of $850 000 for the financial year. Included in this profit was:
Depreciation expense of $120 000
Gain on sale of Investments of $28 000
Also, Accounts Receivable increased by $39 000 and Inventories decreased by $12 000. The cash flow from operating activities during the year was:

A) $731 000
B) $785 000
C) $915 000
D) $969 000.

Question 15

Which of the following items is classified as part of 'operating activities' in the Statement of Cash Flows?

A) Depreciation of non-current assets
B) Receipts from customers from the sale of goods
C) Bad debts expense
D) Proceeds from the sale of non-current assets

Question 16

Items classified as financing activities on an entity's Statement of Cash Flows are usually associated with:

A) movements in non-current liabilities and equity
B) sales of goods and services by the entity
C) disposal of non-current assets
D) purchase on shares by the entity.

Question 17

According to AASB 107 Statement of Cash Flows, which of the following items does NOT fall within the definition of cash?

A) Bank notes and coins
B) Non-bank bills that are readily convertible to cash
C) Deposits on the short-term money market with a term of less than 3 months
D) Accounts receivable

Question 18

During the financial year, Cresswell Limited had a cost of sales amounting to $260 000. Beginning and ending balances of balance sheet related accounts were:
Beginning balance Ending balance
$\begin{array} { l l l } & \text { Beginning balance } & \text { Ending balance } \\> \text { Inventory } & \$ 46000 & \$ 55000 \\> \text { Accounts Payable } & \$ 18000 & \$ 26000\end{array}$
A discount of $2000 for prompt payment was received. The amount of cash paid for goods purchased during the year was:

A) $259 000
B) $263 000
C) $275 000
D) $279 000.

Question 19

During the financial year Marina Limited had sales of $720 000. The beginning balance of accounts receivable was $103 000, and the ending balance was $139 000. Bad debts amounting to $34 000 were written off during the period. The cash receipts from customers during the year amounted to:

A) $650 000
B) $718 000
C) $722 000
D) $790 000.

Question 20

During the financial year Sugianto Limited had sales of $42 000. The opening balance of accounts receivable was $9000, and the closing balance was $12 700. Bad debts amounting to $700 were written off during the period. The cash receipts from sales during the year amounted to:

A) $37 600
B) $39 000
C) $38 300
D) $45 700.

Question 21

The basis of measurement used in the Statement of Cash Flows is:

A) accrual
B) cash and cash equivalents
C) net present value
D) market value.

Question 22

For cash flow reporting purposes, operating activities include:

A) buying and selling of non-current assets
B) incurring and extinguishing equity and debt
C) acquisition and disposal of investments
D) activities not otherwise classified as financing and investing.

Question 23

The Statement of Cash Flows presentation method that separates gross cash inflows from cash outflows is known as the:

A) equity method
B) direct method
C) set-off method
D) net method.

Question 24

The components of cash and cash equivalents:

A) may be disclosed at the option of the entity and reconciled to amounts reported in the statement of financial position
B) must be disclosed and reconciled to amounts reported in the statement of profit or loss and other comprehensive income
C) must be disclosed and reconciled to amounts reported in the statement of financial position
D) must be disclosed and reconciled to amounts reported in the statement of changes in equity.

Question 25

Bank borrowings are ordinarily classified as:

A) operating activities, except for bank overdrafts that are repayable on demand and which form an integral part of an entity's cash management
B) investing activities, except for bank overdrafts that are repayable on demand and which form an integral part of an entity's cash management
C) financing activities, except for bank overdrafts that are repayable on demand *d financing activities, except for bank overdrafts that are repayable on demand and which form an integral part of an entity's cash management.
D) financing activities, except for bank overdrafts that are repayable on demand and which form an integral part of an entity's cash management.

Question 26

An item or transaction will qualify for classification as a cash equivalent:

A) if it has a remaining term of more than three months but no more than six months
B) its term to maturity is no greater than twelve months
C) it has a fixed maturity date of greater than twelve months
D) only if it has a maturity of less than three months.

Question 27

AASB 107 encourages, but does NOT require, the disclosure of:
I the amount of undrawn borrowing facilities that may be available for future operating activities and to settle capital commitments, indicating any restrictions on the use of these facilities
II the aggregate amount of cash flows that represent increases in operating capacity separately from those cash flows that are required to maintain operating capacity
III the amount of the cash flows arising from the operating, investing and financing activities of each reportable segment
IV the name(s) of the entity's bankers

A) I, II and IV
B) II, III and IV
C) I, III and IV
D) I, II and III.

Question 28

Which of the following descriptions best describes cash flows from investing activities? Those activities that relate to:

A) changing the size or financial structure of an entity
B) altering the composition of the debt of an organisation
C) the acquisition or disposal of non-current assets
D) restructuring the working capital components of a business.

Question 29

Cash flows arising from each of the following activities of a financial institution may be reported on a net basis:
I cash receipts and payments for the acceptance and repayment of deposits with a fixed maturity date
II the placement of deposits with and withdrawal of deposits from other financial institutions
III cash advances and loans made to customers and the repayment of those advances and loans
IV cash receipts and payments for the acceptance and repayment of deposits with no fixed maturity date

A) I , II and IV
B) II, III and IV
C) I, III and IV
D) I, II and III.

Question 30

Cash flows arising from the following operating, investing or financing activities may be reported on a net basis when:

A) cash receipts and payments for items in which the turnover is slow, the amounts are large, and the maturities are short
B) cash receipts and payments for items in which the turnover is quick, the amounts small, and the maturities are short
C) cash receipts and payments for items in which the turnover is quick, the amounts are large, and the maturities are short
D) cash receipts and payments for items in which the turnover is quick, the amounts are large, and the maturities are long-term.