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Questions and Answers
According to the passage, why are interest and dividends received classified as cash inflows from investing activities?
According to the passage, why are interest and dividends received classified as cash inflows from investing activities?
- They are the returns from investment activities, not operating activities. (correct)
- They are classified this way for consistency purposes in the textbook.
- They represent the cost of obtaining and retaining finance such as loans and equity.
- They form part of the determination of profit or loss and should be disclosed there.
What is the purpose of the indirect method in the statement of cash flows?
What is the purpose of the indirect method in the statement of cash flows?
- To calculate the cash flows for individual items that make up operating activities.
- To classify interest and dividends paid and received as financing and investing cash flows respectively.
- To portray all pro formas in a consistent manner as described in the textbook.
- To start with the reported net income and adjust it for non-cash transactions and changes in working capital. (correct)
According to the passage, which of the following is an example of a source of funds?
According to the passage, which of the following is an example of a source of funds?
- A decrease in trade receivables. (correct)
- An increase in inventory.
- An increase in trade receivables.
- A decrease in trade payables.
Which of the following is an example of an application of funds according to the passage?
Which of the following is an example of an application of funds according to the passage?
What is the key difference between the direct and indirect methods of preparing the statement of cash flows?
What is the key difference between the direct and indirect methods of preparing the statement of cash flows?
According to the passage, why are items included in points 1 and 2 of the indirect method adjustments not considered actual movements of cash funds?
According to the passage, why are items included in points 1 and 2 of the indirect method adjustments not considered actual movements of cash funds?
Which of the following statements about cash generated from operations is true?
Which of the following statements about cash generated from operations is true?
Where is the tax on operating activities included in the statement of cash flows?
Where is the tax on operating activities included in the statement of cash flows?
Which of the following taxes is included in the tax cash flows discussed in the text?
Which of the following taxes is included in the tax cash flows discussed in the text?
If a portion of the tax expense is attributable to investing activities, where would that tax cash flow be included?
If a portion of the tax expense is attributable to investing activities, where would that tax cash flow be included?
According to IAS 7 (International Accounting Standard 7), where can interest paid, interest received, dividends paid, and dividends received be disclosed?
According to IAS 7 (International Accounting Standard 7), where can interest paid, interest received, dividends paid, and dividends received be disclosed?
In this introductory textbook, where are all taxation entries assumed to be disclosed?
In this introductory textbook, where are all taxation entries assumed to be disclosed?
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