12 Questions
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
Which of the following activities does NOT fall under Operating Activities as per the text?
Cash receipts from investments
Why are cash flows from buying and selling held-for-trading securities classified as operating activities?
Because they are similar to inventories acquired for resale
In what circumstances are loan transactions of financial institutions classified as operating activities?
When they are part of ordinary revenue-producing activities
Why are cash payments for operating expenses classified as part of operating activities?
Because they enter into the determination of profit or loss
Why do entities that manufacture or acquire items of property, plant, and equipment for rental subsequently transfer them to inventories before sale?
To consider them as operating activities
What is the primary purpose of a statement of cash flows?
To provide information about the sources and utilization of cash equivalents
Which of the following is NOT considered a cash equivalent according to PAS 7?
Stock investments held for more than 3 months
How does the statement of cash flows help users assess an entity?
By assessing the entity's ability to generate cash and cash equivalents
Under PAS 7, what is the maximum period for a debt instrument to qualify as a cash equivalent?
3 months before its maturity date
In what situation might an entity report profit under accrual basis but have negative cash flows from operating activities?
When the entity has significant capital expenditures
What additional information can the statement of cash flows provide about an entity's financial performance?
'Quality of earnings' assessment for the entity
Explore the requirements prescribed by PAS 7 for presenting the statement of cash flows. Learn about the sources and utilization of cash and cash equivalents, along with definitions of terms like cash and cash equivalents. Enhance your understanding of historical changes in cash flow.
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