1. A reporting entity is required to prepare a statement of cash flows that is in accordance with the requirements of AASB 107 and shall be presented as an integral part of the notes to the accounts.
FALSE
2. In accordance with AASB 107 Statement of Cash Flows, cash payments to suppliers for goods and services are classified as cash flows from operating activities.
TRUE
3. In accordance with AASB 107 Statement of Cash Flows, dividends paid may be classified as an investing or a financing cash flow.
FALSE
4. In accordance with AASB 107 Statement of Cash Flows, cash receipts from sales of property, plant and equipment are classified as cash flows from operating activities.
FALSE
5. A statement of cash flows is a forecast of net cash flows from operating, investing and financing activities.
FALSE
6. In accordance with AASB 107 Statement of Cash Flows, a bonus share issue is to be classified under financing activities.
FALSE
7. The statement of cash flows is argued by researchers to be a more reliable statement than accrual statements.
TRUE
8. The statement of cash flows effectively provides a reconciliation of the opening and closing cash balances in the statement of financial position.
TRUE
9. While the statement of cash flows is presently required along with the accrual statements, taking a balanced view, it would be sufficient to meet the accountability needs of general purpose financial statement users on its own.
FALSE
10. The statement of cash flows should be subdivided into selling, financing and investing categories.
FALSE
11. If a business consistently has positive cash flows from financing and negative cash flows from investing and operating activities, this is a positive sign for the business.
FALSE
12. AASB 107 requires disclosures about non-cash financing and investing activities.
TRUE
13. AASB 107 requires ledger accounts to be reconstructed in order to calculate cash flows from operating activities.
FALSE
14To calculate the cash flow associated with an accrued expense, any increase in the associated liability should be added to the expense.
FALSE
15. To calculate the cash flow from the issue of debentures, the face value of the debentures would have to be adjusted by deducting any premium or adding any discount on issue.
FALSE
16. Sharma (1996) argues that cash flows from operating activities divided by current debt should replace the current ratio as a measure of liquidity.
FALSE
17. In accordance with AASB 107, non-cash investing and financing transactions are required to be included in the statement of cash flows.
FALSE
18. All cash flows from investing and financing activities are required to be reported on a gross basis.
FALSE
19. Entities are encouraged to report their operating cash flows using the direct method.
TRUE
20. Both IASB and FASB propose that financial statements should be presented in a more aggregated manner.
FALSE
21. The statement of cash flows may assist in determining the ability of an entity to:
22. AASB 107 defines cash equivalents to include:
23. Accounts that represent cash or cash equivalents include:
24. AASB 107 states that for a money market deposit to be classified as cash:
25. An item considered to be a cash equivalent in one company may not be considered as such in another. This is because:
26. Investing activities are defined by AASB 107 as those that:
27. What method does AASB 107 encourage for the reporting of cash flows from operating activities and what does it mean for the presentation of this category in the statement of cash flows?
28. Where the entity uses the direct method a note to the accounts reconciling cash flows from operating activities to net profit is required because:
29. Items that must be separately disclosed in the statement of cash flows include:
30. AASB 107 requires that a note to the accounts shall disclose a reconciliation of cash flows from operating activities to operating profit or loss after income tax as reported in the statement of comprehensive income. The correct adjustments to the operating profit/loss after tax include:
31. AASB 107 requires disclosure of information about transactions and events that do not result in cash flows during the financial year, including:
32. Railway Corporation provides the following information that relates to the period ended 30 June 2015:
What amount of cash was received from customers during the year?
33. DryGrass Ltd provides the following information that relates to the period ended 30 June 2015:
What amount of cash was received from customers during the year?
34. Mopoke Ltd provides the following information that relates to the period ended 30 June 2014:
What amount of cash was received from customers during the year?
35. Mistril Ltd provides the following information for the period ended 30 June 2015:
What are the cash flows from interest, dividends and tax for the period?
36. Mogull Ltd provides the following information for the period ended 30 June 2015:
What are the cash flows from interest, dividends and tax for the period?
37. Up and Away Unlimited provides the following information for the period ended 30 June 2014:
What is the cash paid to suppliers for the period?
38. Cod Ltd provides the following information for the period ended 30 June 2014:
What is the cash paid to suppliers for the period?
39. Hansard Ltd provides the following information for the period ended 30 June 2015:
What was the amount of cash used to acquire plant and equipment?
40. Hybrid Ltd provides the following information for the period ended 30 June 2015:
What was the amount of cash used to acquire plant and equipment?
41. Joplyn Ltd provides the following information for the period ended 30 June 2015:
All transactions are in cash unless otherwise indicated. What is the net cash flow from investing activities?
42. Jaunty Ltd provides the following information for the period ended 30 June 2015:
All transactions are in cash unless otherwise indicated. What is the net cash flow from investing activities?
43. Sonic Co Ltd provides the following information for the period ended 30 June 2015:
During the period Sonic Co Ltd issued debentures with a face value of $1 000 000 at a premium of $560 000. All transactions are in cash unless otherwise indicated. What is the net cash flow from financing activities for the period?
44. Heady Ltd provides the following information for the period ended 30 June 2014:
During the period Sonic Co Ltd issued debentures with a face value of $2 000 000 at a discount of $260 000. All transactions are in cash unless otherwise indicated. What is the net cash flow from financing activities for the period?
45. The following information is provided for Unique Ltd for the period ended 30 June 2015:
All transactions are in cash unless otherwise indicated. What is the net cash flow from operating activities for the period?
46. The following information is provided for Identikit Ltd for the period ended 30 June 2015:
All transactions are in cash unless otherwise indicated. What is the net cash flow from operating activities for the period?
47. When creating a statement of cash flows, certain items must be disclosed separately because of their significance, including:
48. Sharma (1996) suggests that a cash-flow based measure of retained cash flows from operations (RCFFO) may be an important indicator of financial flexibility. How is RCFFO measured?
49. Saints Ltd is preparing a statement of cash flows for the year ended 30 June 2014. You are the accountant of the entity and have collected the following data:
What is the amount of net cash used in investing and financing activities respectively?
50. Swans Machinery Ltd reported a net profit of $3 000 000 for the year ended 30 June 2014. The following changes occurred in the statement of financial position:
Additional information:
During the year Swans Ltd sold equipment with a cost of $250 000 and had accumulated depreciation of $120 000 for a gain of $50 000.
On 30 June 2014 Swans Ltd purchased equipment costing $500 000 with $200 000 in cash and a note payable for $300 000.
Depreciation expense for the year was $520 000.
What is the amount of net cash from operating activities and net cash used in investing activities respectively for the year ended 30 June 2014?
51. Crows Ltd's books show the following information for the preparation of its statement of cash flows for the year ended 30 June 2014:
What is the amount of net cash from operating activities for the year ended 30 June 2014?
52. Lions Ltd engaged in the following activities for the year ended 30 June 2014:
Sold shares in Kangaroo Ltd for $70 000. The investment had a carrying amount of $66 000.
Purchased shares in Cats Ltd for $52 000.
Purchased government bonds for $100 000.
Issued Lions Ltd shares for $100 000.
What is the net cash flow used in investing activities?
53. Bulldogs Ltd had the following activities related to their financial operations:
Paid $1 125 000 for the early retirement of convertible notes (amortised cost of $1 110 000)
Paid cash dividends of $93 000. Preference shares with carrying amount of $120 000 were converted to ordinary shares.
What is net cash used in financing activities for the year ended 30 June 2014?
54. In accordance with AASB 107, what is the appropriate classification for the conversion of preference shares to ordinary shares?
55. The following are cash flow transactions for Mungo Ltd:
Which of the following combinations includes all of the transactions that will determine cash flows from operating activities of Mungo Ltd that are in accordance with AASB 107 Statement of Cash Flows?
56. The following are cash flow transactions for Wadonga Ltd:
Which of the following combinations includes all of the transactions that will determine cash flows from financing activities of Wadonga Ltd that are in accordance with AASB 107 Statement of Cash Flows?
57. The following are cash flow transactions for Cootamundra Ltd:
Which of the following combinations includes all transactions that may by classified under investing activities of Cootamundra Ltd that are in accordance with AASB 107 Statement of Cash Flows?
58. Which of the following statements is not in accordance with AASB 107 Statement of Cash Flows?
59. The following are cash flow transactions for Greenfell Ltd:
Which of the following combinations includes all the non-cash investing and financing transactions of Greenfell Ltd that are required to be disclosed in the notes to the accounts as per AASB 107 Statement of Cash Flows?
60. Which of the following statements is correct in accordance with AASB 107 Statement of Cash Flows?
61. Walker (1987) claimed that 'one of the strongest antidotes to creative accounting is a requirement for statement of cash flows to have __________'.
62. Which of the following would not be an operating activity cash outflow?
63. It is currently argued that the presentation of the various financial statements lack:
64. Traditional financial ratios such as the current ratio or acid-test ratios have come in to question as it is argued that they do not monitor the organisation's:
65. Koko Black was founded in 2003. As of 2015 they wholly own stores in several Australian capital cities. Central to the premise of this young business is Mr Hills' desire to offer customers a 'chocolate experience', from the premium product to the refined service and stylish surroundings. In an interview in 2014, Mr Hills described the company as a private, family-run company and said they had relationships with banks to provide loans to fund expansions. In the years leading up to 2014, Koko Black was expanding yearly by three or four stores. Which of the following is the primary financing cash flows for Koko Black?
66. The following information was extracted from Randwick Ltd's statement of financial position:
2010 |
2009 |
|
$ |
$ |
|
Cash |
25 000 |
19 000 |
Accounts receivable |
176 000 |
82 000 |
Inventory |
117 000 |
64 000 |
Buildings |
31 000 |
51 000 |
Accounts payable |
107 000 |
62 000 |
Accrued expenses |
5000 |
6000 |
Interest payable |
5000 |
2000 |
Income tax payable |
10 000 |
4000 |
If Randwick had the following expenses in its statement of profit or loss, which of them was paid for with cash during the period?
I. Wages expense
II. Interest expense
III. Income tax expense
IV. Other expenses
67. The prepaid insurance account for Darlinghurst Ltd had an opening balance of $4000 and a closing balance of $15 000. The following expenses and loss were extracted from the statement of profit or loss:
$ |
|
Bad debt expense |
15 000 |
Insurance expense |
9 000 |
Other expenses |
198 000 |
Interest expense |
25 000 |
Loss on disposal of land |
18 000 |
Which of the following amounts would appear as a debit in the prepaid insurance account?
68. Fishsy Ltd had the following equity balances:
2018 |
2017 |
|
$000 |
$000 |
|
Share capital |
491 |
420 |
Revaluation surplus |
32 |
17 |
General reserve |
78 |
29 |
Retained earnings |
314 |
280 |
There was a bonus issue during the period declared out of the revaluation surplus account of $15 000. Which of the following is included in the credit side of Share Capital T-account for Fishsy Ltd?
69. The following was extracted from the statement of financial position of Paddington Ltd:
2018 |
2017 |
|
$000 |
$000 |
|
Land |
172 |
149 |
Buildings |
186 |
225 |
Accumulated depreciation—buildings |
(75) |
(81) |
Equipment |
437 |
437 |
Accumulated depreciation—equipment |
(214) |
(149) |
Accrued expenses |
27 |
11 |
Final dividends payable |
16 |
12 |
Share capital |
491 |
420 |
Revaluation reserve |
32 |
17 |
General reserve |
78 |
29 |
Retained earnings |
314 |
280 |
The following additional information during the year is provided:
In Paddington Ltd's accrued expenses T-account, which of the following would be found on the credit side?
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