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Questions and Answers
What is the purpose of presenting cash flows in the statement of cash flows according to different classifications?
What is the purpose of presenting cash flows in the statement of cash flows according to different classifications?
- To enhance inter-comparability among different accounting treatments (correct)
- To confuse stakeholders
- To complicate financial reporting
- To hinder inter-comparability among different accounting treatments
Which of the following activities does NOT fall under Operating Activities as per the text?
Which of the following activities does NOT fall under Operating Activities as per the text?
- Cash payments for operating expenses
- Cash payments for purchasing goods and services
- Cash receipts from selling goods
- Cash receipts from investments (correct)
Why are cash flows from buying and selling held-for-trading securities classified as operating activities?
Why are cash flows from buying and selling held-for-trading securities classified as operating activities?
- Because they are not related to any specific activity
- Because they are related to financing activities
- Because they do not impact cash flows
- Because they are similar to inventories acquired for resale (correct)
In what circumstances are loan transactions of financial institutions classified as operating activities?
In what circumstances are loan transactions of financial institutions classified as operating activities?
Why are cash payments for operating expenses classified as part of operating activities?
Why are cash payments for operating expenses classified as part of operating activities?
Why do entities that manufacture or acquire items of property, plant, and equipment for rental subsequently transfer them to inventories before sale?
Why do entities that manufacture or acquire items of property, plant, and equipment for rental subsequently transfer them to inventories before sale?
What is the primary purpose of a statement of cash flows?
What is the primary purpose of a statement of cash flows?
Which of the following is NOT considered a cash equivalent according to PAS 7?
Which of the following is NOT considered a cash equivalent according to PAS 7?
How does the statement of cash flows help users assess an entity?
How does the statement of cash flows help users assess an entity?
Under PAS 7, what is the maximum period for a debt instrument to qualify as a cash equivalent?
Under PAS 7, what is the maximum period for a debt instrument to qualify as a cash equivalent?
In what situation might an entity report profit under accrual basis but have negative cash flows from operating activities?
In what situation might an entity report profit under accrual basis but have negative cash flows from operating activities?
What additional information can the statement of cash flows provide about an entity's financial performance?
What additional information can the statement of cash flows provide about an entity's financial performance?
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