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IAS 7 Investing Activities 76

The cash flows arising from investing activities represent the extent to which expenditure has been made for resources intended to generate future income and cash flows. Examples. Cash inflows: • Proceeds from sale of property, plant, and equipment • Proceeds from sale of investments • Repayment of cash advances Cash outflows: • Purchase of property, plant, and equipment • Purchase of investments • Cash advances made to third parties

Cash flows from financing activities include funds provided by and paid to owners and third parties. Examples. Cash inflows: • Cash received on issue of shares • Cash received on bank borrowings Cash outflows • Payment of dividends to shareholders • Bank borrowings repayments

Noncash Transactions The required information on such transactions must be disclosed. Examples. • Issue of shares against assets acquired • Conversion of existing debt to equity

MCQ 78

IAS 1 "Presentation of Financial Statements" says that when items of income and expense are significantly large there should be separate disclosure of the these items if it is relevant to explain the performance of the company. Details of these items is usually made: A. In the notes to the financial statements. B. On the Face of the income statement. C. On the face of the statement of financial position. D. On the face of the income statement OR in the notes to the financial statement IAS 1 “Presentation of Financial Statements”, describes many underlying assumptions as overall considerations for the presentation of financial statements. Which of the following are also those identified by the “Framework for preparation of Financial Statements” as the underlying Assumptions? A. Going concern and the accruals basis. B. Fair presentation and compliance with IASs. C. Materiality and aggregation. D. Accounting policies and consistency of presentation.

In accordance with the guidance on implementing IAS 1 “Presentation of Financial Statements”, the statement of changes in equity identifies changes in separate elements of equity. Which of the following statements is correct? A. An issue of shares will increase the balances on share capital, share premium and accumulated profit. B. A surplus on the revaluation of non-current assets will increase the balance on the revaluation reserve or accumulated profit. C. Dividends paid will increase the balance on accumulated profit. D. Dividend paid will decrease the balance on accumulated profit. Which of the following concepts may be the reason why a company chooses not to capitalize small items of equipment held for continuing use in the business, rather than capitalizing them? A. Completeness and materiality. B. Faithfull representation and prudence. C. Accruals and prudence. D. Materiality and comparability.

Which one of the following statements is correct according to IAS1 presentation of financial statements? A. Accounting standards must always be adhered to. B. Accounting standards can be departed from if agreed by all shareholders. C. Accounting standards can be departed from in order to achieve fair presentation. D. Accounting standards can be departed from in order to achieve prudence.

Under IAS 1 “Presentation of financial statements” which of the following items could be disclosed as extraordinary item: A. Write-downs resulting from expropriation of assets by a foreign government. B. Loss from the settlement public and product liability lawsuits. C. Claims paid by a train company as a result of a crash. D. None of them –Extraordinary items are not allowed....