ACCCOB2 Textbook Exercises_Chapter 11 - Financial Statements

Which of the following is true?

a) Cash is always reported as a current asset.
b) Assets are classified as current if they are reasonably expected to be realized in cash or consumed during the normal operating cycle.
c) PAS 7 requires that the statement of cash flows be presented using the direct method.
d) The advances to employees account is presented under prepaid
expenses.

b) Assets are classified as current if they are reasonably expected to be realized in cash or consumed during the normal operating cycle.

Which of the following investment accounts is classified as a current asset?

a) Investment in associate
b) Financial asset at fair value through profit or loss
c) Financial asset at fair value through other comprehensive income
d) Financial asset at amortized cost

b) Financial asset at fair value through profit or loss

Which of the following is usually classified as a noncurrent asset?

a) Office supplies
b) Prepaid rent
c) Plant expansion fund
d) Goods that are in the process of being completed

c) Plant expansion fund

What is the two-statement approach of presenting comprehensive income?

a) A comparative statement of comprehensive income
b) A combined income statement and a statement of changes in equity
c) A combined statement of comprehensive income and retained earnings
d) A separate income statement and a separate statement of comprehensive income

d) A separate income statement and a separate statement of comprehensive income

Which of the following would decrease the amount of cost of sales?

a) Sales returns and allowances
b) Freight in
c) Purchase discount
d) Merchandise inventory, beginning

c) Purchase discount

The withdrawal of merchandise by the owner is presented in the statement of cash flows as which of the following?

a) Outflow under operating activity
b) Outflow under investing activity
c) Outflow under financing activity
d) None of the above

d) None of the above

Which of the following financial information is not presented in the income statement?

a) Investment income
b) Unrealized gain on FA-FVOCI investment
c) Loss on trading securities
d) Unrealized gain on FA-FVPL investment

b) Unrealized gain on FA-FVOCI investment

Loans granted by a financial institution are classified as (lender's viewpoint)
which of the following?

a) Operating activities
b) Investing activities
c) Financing activities
d) Component of cash and cash equivalents

a) Operating activities

Cash receipts from issuing shares and other equity instruments are
classified as:

a) Cash inflows from investing activities
b) Cash outflows for investing activities
c) Cash inflows from financing activities
d) Cash outflows for financing activities

c) Cash inflows from financing activities

How should the repayment of a long-term loan comprising the repayment of the principal amount and interest due to date be treated in a statement of cash flows?

a) The repayment of the principal loan is an investing cash flow, and the interest payment is either an operating cash flow or a financing cash flow.
b) The repayment of the principal loan is a financing cash flow, and the interest payment is either an operating cash flow or a financing cash flow.
c) The repayment of the principal loan is a financing cash flow, and the interest payment is either an operating cash flow or investing cash flow.
d) The repayment of the principal loan is a financing cash flow, the interest payment is netted against the interest received on bank deposits, and the net amount of interest is shown as operating cash flow.

b) The repayment of the principal loan is a financing cash flow, and the interest payment is either an operating cash flow or a financing cash flow.