Reference no: EM132774206

TRUE OR FALSE

Question 1. The direct method is generally favored by analysts and other users of cash flow statements.

Question 2. The receipt of dividends should be classified as an operating activity only, while the payment of dividends is to be classified as a financing activity only according to PAS 7.

Question 3. When the indirect method is used, separate disclosure of interest paid and income taxes paid is required.

Question 4. According to PAS 7 Statement of Cash Flows, an entity shall disclose the components of cash and cash equivalents and shall present a reconciliation of the amounts in its statement of cash flows with the equivalent items reported in the statement of financial position.

Question 5. The net cash flow from operations must be reported using the direct method.

Question 6. Noncash items, such as depreciation expense, must be added to net income to arrive at net cash provided by (used in) operating activities when the indirect method is used.

Question 7. When using the indirect method, losses are subtracted from net income in computing cash flow from operations.

Question 8. Net cash provided by (used in) operating, financing, and investing activities are combined to derive the amount of cash and cash equivalents at the end of the year.

Question 9. The indirect method of reporting net cash flow from operations shows the operating cash receipts and cash payments.

Question 10. All transactions with investment securities, held for trading securities, FVOCI securities, and amortized cost securities are reported in the investing section of the statement of cash flows.