cash flow

Testbank to accompany

Applying International Accounting Standards by Alfredson, Leo, Picker, Pacter & Radford Prepared by Victoria Wise

John Wiley & Sons Australia, Ltd 2005

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CHAPTER 15 – Cash flow statements Question 1 Warner Limited had the following cash flows during a reporting period: Acquisition of subsidiary, net of cash flows $250 000 Dividends paid $65 000 Repayment of borrowings $90 000 Interest paid on borrowings $57 000 Proceeds from sale of plant $215 000

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What is the amount of the cash flows in relation to financing activities of Warner Limited for the reporting period? A B C D

net cash inflow net cash outflow net cash inflow net cash inflow

$155 000; $155 000; $212 000; $212 000.

Question 2 The following cash flow activities are regarded as investing cash flows: A B C D

income taxes paid; interest paid; acquisition of subsidiary net of cash acquired; proceeds from issue of debentures.

Question 3 Brett Limited had a net profit after tax of $850 000 for the financial year. Included in this profit was: Depreciation expense of $120 000 Gain on sale of Investments of $28 000

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Also, Accounts Receivable increased by $39 000 and Inventories decreased by $12 000. The cash flow from operating activities during the year was: A B C

$785 000; $731 000; $915 000;

Applying International Accounting Standards – Chapter 15

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$969 000.

Question 4 During the financial year Marina Limited had sales of $720 000. The beginning balance of Accounts receivable was $103 000, and the ending balance was $139 000. Bad debts amounting to $34 000 were written off during the period. The cash receipts from customers during the year amounted to: A B C D

$718 000; $650 000; $790 000; $722 000.

Question 5 During the financial year, Cresswell Limited had a Cost of Sales amounting to $260 000. Beginning and ending balances were: Beginning balance Inventory $46 000 Accounts Payable $18 000

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Ending balance $55 000 $26 000

A discount of $2 000 for prompt payment was received. The amount of cash paid for goods purchased during the year was: A B C D

$259 000; $263 000; $275 000; $279 000.

Question 6 Katsis Limited had the following cash flows during the reporting period:      

Purchase of intangibles $30 000 Proceeds from sale of plant $28 000 Receipts from customers $832 000 Payments to suppliers $593 000 Interest received $17 600 Income taxes paid $45 500

The net cash connected to operating activities was: Applying International Accounting Standards – Chapter 15

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A B C D

$239 100; $269 100; $256 600; $211 100.

Question 7 At balance sheet date, Dim Limited had the following net balance from cash flows: Operating activities, $53 440; Investing activities, $45 230; Financing activities, $(47 860).

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If the company had an ending balance of cash amounting to $107 310, what was the comparative ending balance of cash for the previous year? A B C D

$(39 220); $163 380; $56 500; $158 120.

Question 8 When presenting the proceeds from the acquisition and disposal of subsidiaries, IAS 7 Cash Flow Statements, requires that the aggregate cash flows: A B C D

should be presented as operating activities; should be presented separately; should be included amongst financing activities; may be set off for presentation purposes.

Question 9 In respect to both acquisitions and disposals of investments in subsidiaries, IAS 7 Cash Flow Statements, requires that an entity should disclose, in aggregate, the following: I. II. III. IV.

The total purchase or disposal consideration. The portion of the consideration discharged by cash or cash equivalents. The amount of cash and cash equivalents in the subsidiary acquired or disposed of. The amount of the non-cash assets and liabilities acquired or disposed of.

Applying International Accounting Standards – Chapter 15

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I, II, III and IV; I, II, and III only; I, II and IV only; II and III only.

Question 10 Which of the following items would be presented in a cash flow statement? A B C D

payment of dividends through a share investment scheme; acquisition of an investment in a subsidiary for consideration consisting of an exchange of non-current assets and liabilities; proceeds from the issue of debentures; refinancing of long-term debt.

Question 11 The following item would not appear in a cash flow statement: A B C D

receipts of cash from customers; conversion of preference shares to ordinary shares; payment of creditors; proceeds on disposal of non-current assets.

Question 12 IAS 7 Cash Flow Statements, requires that investing and financing transactions that do not require the use of cash or cash equivalents should be: A B C D

excluded from a cash flow statement; included in a cash flow statement before operating, investing and financing activities; presented in the cash flow statement after operating activities and before investing and financing activities; presented in a cash flow statement after the operating, investing and financing activities have been presented.

Applying International Accounting Standards – Chapter 15

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ANSWERS 1

B

2

C

3

C

4

B

5

A

6

D

7

C

8

B

9

A

10

C

11

B

12

A

Applying International Accounting Standards – Chapter 15