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

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

A net cash inflow $155 000;

B net cash outflow $155 000;
C net cash inflow $212 000;
D net cash inflow $212 000.

Question 2

The following cash flow activities are regarded as investing cash flows:

A income taxes paid;

B interest paid;
C acquisition of subsidiary net of cash acquired;
D 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

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

A $785 000;
B $731 000;
C $915 000;

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D $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 $718 000;
B $650 000;
C $790 000;
D $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 Ending balance

Inventory $46 000 $55 000
Accounts Payable $18 000 $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 $259 000;
B $263 000;
C $275 000;
D $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:

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A $239 100;
B $269 100;
C $256 600;
D $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).

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 $(39 220);
B $163 380;
C $56 500;
D $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 should be presented as operating activities;

B should be presented separately;
C should be included amongst financing activities;
D 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. The total purchase or disposal consideration.

II. The portion of the consideration discharged by cash or cash equivalents.
III. The amount of cash and cash equivalents in the subsidiary acquired or disposed
of.
IV. The amount of the non-cash assets and liabilities acquired or disposed of.

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A I, II, III and IV;

B I, II, and III only;
C I, II and IV only;
D II and III only.

Question 10

Which of the following items would be presented in a cash flow statement?

A payment of dividends through a share investment scheme;

B acquisition of an investment in a subsidiary for consideration consisting of an
exchange of non-current assets and liabilities;
C proceeds from the issue of debentures;
D refinancing of long-term debt.

Question 11

The following item would not appear in a cash flow statement:

A receipts of cash from customers;

B conversion of preference shares to ordinary shares;
C payment of creditors;
D 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 excluded from a cash flow statement;

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

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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