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Questions and Answers
What is the primary purpose of the statement of cash flows?
What is the primary purpose of the statement of cash flows?
Which of the following activities is NOT classified as operating activities in the statement of cash flows?
Which of the following activities is NOT classified as operating activities in the statement of cash flows?
What type of activities would include transactions affecting equity and non-operating liabilities?
What type of activities would include transactions affecting equity and non-operating liabilities?
Which of the following is considered a cash payment for operating expenses?
Which of the following is considered a cash payment for operating expenses?
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In the statement of cash flows, cash receipts from contracts held for trading purposes fall under which category?
In the statement of cash flows, cash receipts from contracts held for trading purposes fall under which category?
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What is an example of an adjusting event after the reporting period?
What is an example of an adjusting event after the reporting period?
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Which of the following is classified as a non-adjusting event that requires disclosure?
Which of the following is classified as a non-adjusting event that requires disclosure?
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What type of event is the discovery of errors that affect the accuracy of financial statements?
What type of event is the discovery of errors that affect the accuracy of financial statements?
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What do changes in interest rates after the reporting period represent?
What do changes in interest rates after the reporting period represent?
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Which of the following would not typically require disclosure if it occurs after the reporting period?
Which of the following would not typically require disclosure if it occurs after the reporting period?
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Which of the following statements is true regarding events after the reporting period?
Which of the following statements is true regarding events after the reporting period?
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What is indicated by the sale of inventory after the reporting period?
What is indicated by the sale of inventory after the reporting period?
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Which event after the reporting period does not typically affect the reported financial position?
Which event after the reporting period does not typically affect the reported financial position?
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What type of cash flows are categorized under investing activities?
What type of cash flows are categorized under investing activities?
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Which of the following is an example of cash flows from financing activities?
Which of the following is an example of cash flows from financing activities?
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What distinguishes cash flows from investing activities related to equity instruments?
What distinguishes cash flows from investing activities related to equity instruments?
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How does the direct method report cash flows from operating activities?
How does the direct method report cash flows from operating activities?
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According to the Philippine Accounting Standards (PAS 8), accounting policies are defined as what?
According to the Philippine Accounting Standards (PAS 8), accounting policies are defined as what?
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Which of the following does NOT represent an example of cash flows from investing activities?
Which of the following does NOT represent an example of cash flows from investing activities?
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What is indicated by cash payments made by a lessee?
What is indicated by cash payments made by a lessee?
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What primary activity does the indirect method focus on when reporting cash flows?
What primary activity does the indirect method focus on when reporting cash flows?
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What is required for an entity to change an accounting policy?
What is required for an entity to change an accounting policy?
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When is a change in accounting policy treated as a change in accounting estimate?
When is a change in accounting policy treated as a change in accounting estimate?
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Which of the following is an example of a change in accounting estimate?
Which of the following is an example of a change in accounting estimate?
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What are adjusting events after the reporting period?
What are adjusting events after the reporting period?
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What is NOT included in the definition of errors?
What is NOT included in the definition of errors?
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What type of event is the settlement of a court case that confirms a present obligation at the end of the reporting period?
What type of event is the settlement of a court case that confirms a present obligation at the end of the reporting period?
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When are non-adjusting events recognized?
When are non-adjusting events recognized?
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What does the date of authorization for the financial statements represent?
What does the date of authorization for the financial statements represent?
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Which of the following is NOT an example of an error?
Which of the following is NOT an example of an error?
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Which of the following changes would fall under the category of accounting policy change?
Which of the following changes would fall under the category of accounting policy change?
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Study Notes
Statement of Cash Flows
- Provides information on the sources and use of cash and cash equivalents during a period.
- Presents cash flows in categories:
- Operating activities: Transactions affecting profit or loss (impact income statement).
- Investing activities: Transactions affecting long-term assets and other non-operating assets.
- Financing activities: Transactions impacting equity and non-operating liabilities.
Examples of Cash Flows
Operating Activities
- Cash receipts from sales of goods, services, or other income.
- Cash payments for purchases of goods and services.
- Employee benefits payments, insurance costs, and income tax payments or refunds.
- Cash receipts and payments from contracts (dealing or trading).
Investing Activities
- Acquiring and selling property, plant, equipment, investment property, intangible assets, and other non-current assets.
- Buying and selling equity and debt instruments of other entities (excluding those classified as cash equivalents or held for trading).
- Cash transactions on derivative assets and liabilities (excluding those held for trading or classified as financing activities).
Financing Activities
- Cash proceeds from issuing equity instruments.
- Payments to redeem equity instruments.
- Cash receipts from issuing notes, loans, bonds, mortgages, short-term or long-term borrowings.
- Repayments of loans, bonds, mortgages, short-term or long-term borrowings.
- Cash payments by a lessee to reduce outstanding lease liability.
Errors and Changes in Accounting Policy, Estimates
- PAS 8 outlines the criteria for selecting, applying, and changing accounting policies.
- Includes accounting and disclosure requirements for changes in policies and estimates, as well as corrections of prior period errors.
- Accounting policies are defined as principles, bases, conventions, rules, and practices for preparing financial statements.
- Accounting policies are the relevant Philippine Financial Reporting Standards (PFRSs) adopted by an entity.
- PFRSs are Standards and Interpretations issued by the Financial Reporting Standards Council (FRSC).
Events After the Reporting Period
- Events after the reporting period are events between the reporting period end and the authorization date of the financial statements.
- Two types of events:
- Adjusting events: Provide evidence of conditions existing at the reporting period end.
- Non-adjusting events: Indicate conditions arising after the reporting period.
- Examples of events include settlements of court cases, asset impairment, and cost determination of purchased assets.
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Description
This quiz covers the essentials of the Statement of Cash Flows, detailing the sources and uses of cash during a particular period. It categorizes cash flows into operating, investing, and financing activities, providing examples for each category. Test your understanding of how these activities impact financial statements.
