PAS 7 CASH FLOW STATEMENTS
1. Which of the following statements is/are incorrect about the statement of cash flows
I. Cash flows arising from taxes on income shall be separately disclosed and shall be classified as cash flows from
operating activities unless they can be specifically identified with financing and investing activities
II. When accounting for an investment in an associate or a subsidiary accounted for by use of the equity or cost method,
an investor restricts its reporting in the cash flow statements to the cash flows between itself and the investor.
III. The aggregate cash flows arising from acquisitions and from disposals of subsidiaries or other business units shall be
presented separately and classified as investing activities or financing activities.
IV. An entity shall not disclose the components of cash and cash equivalents
a. I and II only b. II and IV only c. III and IV only d. I and IV only
2. The primary purpose of the cash flow statement is
a. To provide relevant information about cash receipts and cash payments of an entity during a period
b. To help investors, creditors and other users to assess the entity’s ability to generate positive future net cash flows
c. To disclose separately noncash investing and financing activities
d. to assess the ability of the entity to pay dividends to stockholders
3. An entity shall prepare a cash flow statements and shall present it as
a. Supplementary financial statements
b. Note to financial statements
c. Supporting schedule for amount appearing as cash and cash equivalents
d. Integral part of the enterprise’s basic financial statements
4. Cash inflows in the cash flow statement are
a. Inflows of cash and cash equivalents
b. Outflows of cash and cash equivalents
c. Inflows and outflows of cash
d. Inflows and outflows of cash and cash equivalents
5. Which can qualify as cash equivalents?
a. One-year BSP treasury bill
b. Six-month money market placements
c. Equity securities
d. Preferred shares with specified redemption date and acquired three months before redemption
6. An entity may hold securities for dealing or trading purposes. Cash flows arising from the purchase and sale of dealing
or trading securities are
a. Classified as operating activities c. Classified as financing activities
b. Classified as investing activities d. Not reported in the cash flow statement
7. Cash payments to acquire equity instruments of other entities and interest in joint ventures are
a. Cash outflows for financing activities c. Cash outflows from investing activities
b. Cash inflows from investing activities d. Cash inflows from financing activities
8. An enterprise should prepare a cash flow statement and should present it as
a. Integral part of the enterprise’s basic financial statements.
b. Supporting schedule for the amount appearing as cash and cash equivalent.
c. Note to financial statements.
d. Supplementary financial statement.
9. Cash flows in the cash flow statement are
a. Inflows and outflows of cash
b. Inflows and outflows of cash and cash equivalents
c. Inflows of cash and cash equivalents
d. Outflows of cash and cash equivalents
10. XYZ Company purchased a three-month Treasury bill. The company’s policy is to treat as cash equivalents all highly
liquid investments with an original maturity of three months or less when purchased. How should this purchase be
reported in the cash flow statement?
a. As an outflow from operating activities c. As an outflow from investing activities
b. As an outflow from financing activities d. Not reported
11. Cash receipts from royalties, fees, commissions and other revenue are
a. Cash outflows for operating activities c. Cash inflows from investing activities
b. Cash inflows from operating activities d. Cash outflows for investing activities
12. Cash payments to acquire equity or debt instruments of other enterprises are
a. Cash outflows for financing activities c. Cash outflows for investing activities
b. Cash inflows from financing activities d. Cash inflows from investing activities
PAS 7 CASH FLOW STATEMENTS
13. Cash receipts from issuing shares and other equity instruments are
a. Cash inflows from financing activities c. Cash outflows for investing activities
b. Cash inflows from investing activities d. Cash outflows for financing activities
14. Cash payments to owners to acquire or redeem the enterprise’s shares are
a. Cash inflows from financing activities c. Cash inflows from investing activities
b. Cash outflows for financing activities d. Cash outflows for investing activities
15. Interest payments to lenders and other creditors should be classified as cash outflows for
a. Operating activities c. Borrowing activities
b. Lending activities d. Financing activities
16. Dividend payments to owners should be classified as cash outflows for
a. Operating activities c. Financing activities
b. Investing activities d. Ordinary activities
17. Cash flows arising from income taxes should be separately disclosed and should be classified as
a. Operating activities c. Investing activities
b. Financing activities d. Extraordinary activities
18. The aggregate cash flows from acquisition and disposal of a subsidiary should
a. Be classified as operating activities c. Be classified as financing activities
b. Be classified as investing activities d. Not be reported
