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IAS 7 Multiple Question and Answers

The document contains questions and explanations about cash flow statements and the classification of activities as operating, investing, or financing according to IAS 7. It states that operating activities relate to an entity's normal operating cycle and include cash payments to employees. It also notes that changes in equity capital and borrowings are classified as financing activities. The principal revenue activities of a company are operating activities.

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lani m, cardenio
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388 views4 pages

IAS 7 Multiple Question and Answers

The document contains questions and explanations about cash flow statements and the classification of activities as operating, investing, or financing according to IAS 7. It states that operating activities relate to an entity's normal operating cycle and include cash payments to employees. It also notes that changes in equity capital and borrowings are classified as financing activities. The principal revenue activities of a company are operating activities.

Uploaded by

lani m, cardenio
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Question 1 of 4

Activities that result in changes in the size and composition of the equity capital and
borrowings of an entity are called:
 Operating activities
 Investing activities
 Financing activities
 None of these

Question 2 of 4
Cash payments to and on behalf of employees is an example of cash flows from
 Operating activities
 Financing activities
 Investing activities
 None of these

Correct

 Operating activities – Cash flows from operating activities relate to the cash used in
the entity’s normal operating cycle. Payments to employees for wages are required
for a business to trade and are considered part of the operating activities.

Question 3 of 4
Which of the following is not a heading for cash flows under IAS 7?
 Cash flows from operating activities
 Cash flows from investing activities
 Cash flows from normal activities
 Cash flows from financing activities

Question 4 of 4
The principal revenue-producing activities of an entity are called…
 Operating activities
 Investing activities
 Financing activities
 None of these
A cash flow statement provides information that enables users to evaluate the changes
in:

Net assets of an undertaking

Its financial structure

Solvency

Its liquidity

Daily sales and purchases, employee costs and general overheads


comprise:
Investing activities

Financing activities

Component of cash and cash equivalent

Operating activities

Activities that result in changes in the size (and composition) of the equity
capital, and borrowings are:
Component of cash and cash equivalent

Financing activities

Operating activities

Investing activities

For an investment to qualify as a cash equivalent, it must be:


Illiquid and low risk

Liquid and high risk

Liquid and medium risk

Liquid and low risk

The maximum maturity of a cash equivalent is:


6 month

1 month

12 month

3 month
Extracts from the statements of financial position of Naveed Ltd
are as given in table:<br><br>On 01 January 2012 a bonus issue
of one new share for every 10 held was made, financed from the
share premium account. This was followed by a further issue for
cash. What amount will appear under ‘cash flows from financing
activities’ in the statement of cash flows of Naveed Ltd for the
year ended 31 December 2012 in respect of shares issues?

$ 550 million
$ 500 million
$ 450 million
$ 250 million

Extracts from the statements of financial position of Naveed Ltd are as


given in table:<br><br>On 01 January 2012 a bonus issue of one new
share for every 10 held was made, financed from the share premium
account. This was followed by a further issue for cash. What amount
will appear under ‘cash flows from financing activities’ in the statement
of cash flows of Naveed Ltd for the year ended 31 December 2012 in
respect of shares issues?

Correct answer: $ 500 million

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