Assessment Tasks 5-1

A. Multiple Choice: Theory 1

1. The primary purpose of a statement of cash flows is to provide relevant information about
a. Difference between net income and associated cash receipts and disbursement.
b. An entity’s ability to generate positive net cash flows.
c. The cash receipts and cash disbursements of an entity during a period
d. An entity’s ability to meet cash operating needs
2. Cash equivalents are;
a. Treasury bills and money market funds.
b. Investments with original maturities of three months or less.
c. Readily convertible to known amount of cash.
d. All of these are features of cash equivalents.
3. Cash advances and loans made by a financial institution are usually classified as
a. Operating activities
b. Investing activities
c. Financing activities
d. Compound of cash and cash equivalents
4. Under IFRS, an entity can report interest paid on bank loan in the statement of cash
flows
a. operating activities
b. Either in operating activities or financing activities
c. In financing activities
d. In investing activities or financing activities
5. Cash flows relating to asset held for rental to others are classified as
a. Operating
b. Investing
c. Financing
d. Either operating or investing
6. Cash receipts from royalties and commissions are
a. Cash outflows for operating activities
b. Cash inflows from operating activities

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 c. Cash inflows from investing activities
d. Cash outflows for financing activities.
7. All can be classified as cash and cash equivalents, except
a. Time deposit due in 60 days
b. Treasury bills due for repayment in 90 days
c. Equity investments
d. Bank overdraft
8. Cash flows arising from trading securities are
a. Classified as operating activities
b. Classified as investing activities
c. Classified as financing activities
d. Not reported in the cash flow statement
9. Noncash investing and financing activities are
a. Reported only if the direct method is used.
b. Reported only if the indirect method is used.
c. Disclosed in a note or separate schedule.
d. Not reported.
10. Interest payments to lenders are classified as
a. Operating activities
b. Borrowing activities
c. Lending activities
d. Financing activities
11. Which of the following is not considered as a cash equivalent?
a. A three-year treasury note maturing on January 31 of next year purchased
by the entity
on December 1 of the current year.
b. A three-year treasury note maturing on January 31, of next year purchased by the
entity
on December 1 of the current year
c. A 90-day Treasury bill
d. A 60-day money market placement
12. Cash payments to acquire equity investments are
a. Cash outflows for financing activities

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 b. Cash inflows from investing activities
c. Cash outflows for investing activities
d. Cash inflows from financing activities
13. Cash receipts from issuing shares are
a. Cash inflows from investing activities
b. Cash outflows for investing activities
c. Cash inflows from financing activities
d. Cash outflows for financing activities
14. Which classification of the cash flow arising from the proceeds from an earthquake
disaster settlement would be most appropriate?

a. Cash flow from operating activities

b. Cash flow from investing activities
c. Cash flow from financing activities
d. Does not appear in the statement of cash flows
15. Dividend payments to shareholders are classified as
a. Cash outflows for investing activities
b. Cash inflows from investing activities
c. Cash inflows from financing activities
d. Cash outflows for financing activities
16. Under IFRS the dividend received from share investments can be classified as
a. Either an operating activity or a financing activity
b. Either an operating activity or investing activity
c. Only as an investing activity
d. Only as operating activity
17. When an entity purchased a three month Treasury bill, how would the purchase be
treated in preparing the statement of cash flows?
a. Not reported
b. An outflow for financing activities
c. An outflow for lending activities
d. An outflow for investing activities
18. Interest received is classified as cash flow from
a. Operating activities

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 b. Investing activities
c. Financing activities
d. Revenue activities
19. Bank overdrafts that are repayable on demand and the bank balance often fluctuates
from positive to overdrawn shall be classified as
a. Operating activities
b. Investing activities
c. Financing activities
d. Component of cash and cash equivalents
20. Under IFRS, dividend paid can be classified
a. Either as financing activity or operating activity
b. Either as operating activity or investing activity
c. Only as financing activity
d. Only as operating activity

B. Multiple Choice with Computation

1. Ribbon Company provided the following information during the current year:
Dividend received 500,000
Dividend paid 1,000,000
Cash received from customers 9,000,000
Proceeds from issuing share capital 1,500,000
Interest received 200,000
Proceeds from sale of long term investments 2,000,000
Cash paid to suppliers and employees 6,000,000
Interest paid on long term debt 400,000
Income taxes paid 300,000
Cash balance January 1 1,800,000

1a. What is the net cash provided by operating activities?

a. 3,000,000 b. 3,300,000 c. 2,700,000 d. 2,000,000

1b. What is the net cash provided by investing activities?

a. 2,500,000 b. 2,000,000 c. 2,200,000 d. -0-

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1c.. What is the net cash provided by financing activities?
a. 1,500,000 b. 1,000,000 c. 500,000 d. -0-
1d. What is the cash balance on December 31?
a. 6,300,000 b. 5,500,000 c. 4,800,000 d. 7,300,000
2. On December 31, 2020, Kale Company had the following balances in the accounts
maintained at First Bank.
Checking account #101 1,750,000
Checking account #201 ( 100,000)
Time deposit 250,000
Money market placement 1,000,000
90-day treasury bill, due February 28, 2021 500,000
180-day treasury bill, due March 15, 2021 800,000
The entity classified investments with original maturities of three months or less as cash
equivalents.
On December 31, 2020, what amount should be reported as cash and cash
equivalents?
a. 3,400,000 b. 2,000,000 c. 2,400,000 d. 3,200,000

3. Oakwood Company provided the following data for the year

Cash balance, beginning of year 1,300,000
Cash flow from financing activities 1,000,000
Cash flow from operating activities 400,000
Cash flow from investing activities (1,500,000)
Total shareholders’ equity, beginning of year 2,000,000
What is the cash balance at the end of current year?
a. 1,200,000 b. 1,600,000 c. 1,400,000 d. 1,700,000
4. Alpha Company had the following activities during the current year:
• Acquired 2,000 shares as investment for P2,600,000
• Sold an investment for P3,500,000 when the carrying amount was P3,300,000
• Acquired a P5,000,000, 4-year certificate of deposit from a bank. During the year,
interest of P375,000 was paid to Alpha.
• Collected dividends of P120,000 on share investments.

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In the statement of cash flows, what amount should be reported as net cash used in
investing activities?
a. 3,725,000 b. 3,805,000 c. 3,980,000 d. 4,100,000

5. Kollar Company provided the following data for the current year:

Purchase of real estate for cash 5,500,000

Cash was borrowed from bank to purchase real 5,500,000
estate
Sale of investment for cash 5,000,000
Dividend paid 6,000,000
Issuance of ordinary shares for cash 2,500,000
Purchase of patent for cash 1,250,000
Payment of bank loan 1,500,000
Issuance of bonds payable for cash 3,000,000

5a. What is the net cash provided by financing activities?

a. 5,000,000 b. 3,500,000 c. 4,500,000 d. 5,500,000

5b. What is the net cash used in investing activities?

a. 6,750,000 b. 3,750,000 c. 1,750,000 d. 500,000