Ch6 The Statement Of Cash Flows Test Bank Docx

Chapter 6: The Statement of Cash Flows

Test Bank

Type: multiple choice question

Title: Chapter 06 Question 01

1) Roberta Limited has an operating profit for the year ended 28 February 2022 of £25,000. During the year, £40,000 depreciation was charged on the company’s non-current assets. Inventory at 28 February 2021 was £10,000, while inventory at 28 February 2022 was £15,000. Roberta Limited trades for cash and had no trade receivables at either 28 February 2021 or 28 February 2022. Trade payables at 28 February 2021 stood at £20,000 while trade payables at 28 February 2022 amounted to £35,000. During the year, Roberta Limited sold non-current assets realising a profit on disposal of £3,000. What is Roberta Limited’s cash inflow from operating activities for the year ended 28 February 2022 using the indirect method?

a. £42,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

b. £72,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

c. £78,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

d. £82,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

Type: multiple choice question

Title: Chapter 06 Question 02

2) Jonathan Limited bought plant and machinery costing £24,000 3 years ago. The plant and machinery was estimated to have a residual value of £4,000 and an estimated useful life of 4 years. The plant and machinery has been depreciated on the straight line basis. At the end of the third year, the plant and machinery was sold for £12,000. What is the profit or loss on disposal to deduct or add back to operating profit in the statement of cash flows?

a. £3,000 loss

Heading reference: Profits and losses on disposal of non-current assets, Prepayments and accruals

b. £3,000 profit

Heading reference: Profits and losses on disposal of non-current assets, Prepayments and accruals

c. £6,000 profit

Heading reference: Profits and losses on disposal of non-current assets, Prepayments and accruals

d. £6,000 loss

Heading reference: Profits and losses on disposal of non-current assets, Prepayments and accruals

Type: multiple choice question

Title: Chapter 06 Question 03

3) Luigi Limited has an operating profit for the year ended 30 June 2021 of £84,000. During the year, £65,000 depreciation was charged on the company’s non-current assets. Inventory at 30 June 2020 was £20,000, while inventory at 30 June 2021 was £25,000. Trade receivables at 30 June 2021 were £35,000 compared to trade receivables at 30 June 2020 of £38,000. Trade payables at 30 June 2021 totalled £29,000 compared to trade payables at 30 June 2020 of £31,000. What is Luigi Limited’s cash inflow from operating activities for the year ended 30 June 2021 using the indirect method?

a. £139,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

b. £145,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

c. £149,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

d. £153,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

Type: multiple choice question

Title: Chapter 06 Question 04

4) Andreas Limited has the following figures in the financial statements for the year ended 30 November 2021:

What is Andreas Limited’s cash inflow from operating activities for the year ended 30 November 2021 using the indirect method?

a. £56,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

b. £66,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

c. £72,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

d. £84,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

Type: multiple choice question

Title: Chapter 06 Question 05

5) Jana Limited has the following figures in the financial statements for the year ended 31 August 2021:

What is Jana Limited’s cash inflow from operating activities for the year ended 31 August 2021 using the indirect method?

a. £14,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

b. £24,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

c. £44,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

d. £54,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

Type: multiple choice question

Title: Chapter 06 Question 06

6) Barry Limited has the following figures in the financial statements for the year ended 31 March 2022:

What is Barry Limited’s cash inflow from operating activities for the year ended 31 March 2022 using the indirect method?

a. £271,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

b. £317,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

c. £347,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

d. £375,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

Type: multiple choice question

Title: Chapter 06 Question 07

7) Boris Limited has the following figures in the financial statements for the year ended 31 December 2021:

What is Boris Limited’s cash inflow from operating activities for the year ended 31 December 2021 using the indirect method?

a. £131,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

b. £155,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

c. £169,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

d. £179,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

Type: multiple choice question

Title: Chapter 06 Question 08

8) Which one of the following is not a cash outflow from operating activities?

a. Cash paid to employees to pay for wages and salaries.

Heading reference: Cash flows from operating activities

b. Cash paid to the tax authorities to pay income tax that is due.

Heading reference: Cash flows from operating activities

c. Cash paid to the bank to pay interest due on a loan.

Heading reference:

Introduction (Chapter 3) Expenditure in the income statement

Statement of cash flows: the IAS 7 presentation format

Cash flows from financing activities

d. Cash paid to suppliers to pay for trading goods delivered.

Heading reference: Cash flows from operating activities

Type: true-false

Title: Chapter 06 Question 09

9) A profit on disposal of a non-current asset is added to the operating profit when calculating the cash inflow or outflow from operating activities.

a. True

Heading reference: Profits and losses on disposal of non-current assets, Prepayments and accruals

b. False

Heading reference: Profits and losses on disposal of non-current assets, Prepayments and accruals

Type: true-false

Title: Chapter 06 Question 10

10) Increases in provisions and accruals are added to the operating profit when calculating the cash inflow or outflow from operating activities.

a. True

Heading reference: The indirect method: cash flows from operating activities: inflows or outflows?

b. False

Heading reference: The indirect method: cash flows from operating activities: inflows or outflows?

Type: true-false

Title: Chapter 06 Question 11

11) An increase in prepayments is added to the operating profit when calculating the cash inflow or outflow from operating activities.

a. True

Heading reference: The indirect method: cash flows from operating activities: inflows or outflows?

b. False

Heading reference: The indirect method: cash flows from operating activities: inflows or outflows?

Type: multiple choice question

Title: Chapter 06 Question 12

12) Which one of the following is not a cash flow from investing activities?

a. Interest paid on borrowings.

Heading reference: Cash flows from investing activities, Cash flows from financing activities

b. Cash paid to acquire property, plant and equipment.

Heading reference: Cash flows from investing activities

c. Trademarks acquired for cash.

Heading reference: Cash flows from investing activities

d. Dividends received.

Heading reference: Cash flows from investing activities

Type: true-false

Title: Chapter 06 Question 13

13) Cash flows from investing activities consist of cash paid out to acquire new non-current assets, cash paid to acquire non-current asset investments, cash received from the sale of non-current assets, cash received from the sale of non-current asset investments, interest received and dividends received.

a. True

Heading reference: Statement of cash flows: the IAS 7 presentation format, Cash flows from investing activities

b. False

Heading reference: Statement of cash flows: the IAS 7 presentation format, Cash flows from investing activities

Type: true-false

Title: Chapter 06 Question 14

14) ‘Interest paid’ appears under cash flows from investing activities.

a. True

Heading reference: Cash flows from investing activities, Cash flows from financing activities

b. False

Heading reference: Cash flows from investing activities, Cash flows from financing activities

Type: multiple choice question

Title: Chapter 06 Question 15

15) The J Organization has cash inflows from operating activities of £14.5m, cash inflows from financing activities of £2.6m and a net decrease in cash and cash equivalents of £4.2m. What is the cash outflow from investing activities?

a. £7.7m

Heading reference: Statement of cash flows: the IAS 7 presentation format

b. £12.9m

Heading reference: Statement of cash flows: the IAS 7 presentation format

c. £16.1m

Heading reference: Statement of cash flows: the IAS 7 presentation format

d. £21.3m

Heading reference: Statement of cash flows: the IAS 7 presentation format

Type: multiple choice question

Title: Chapter 06 Question 16

16) Big Finance Corporation has cash inflows from operating activities of £20.5m, cash outflows from financing activities of £5.2m and a net increase in cash and cash equivalents of £6.7m. What is the cash outflow from investing activities?

a. £8.6m

Heading reference: Statement of cash flows: the IAS 7 presentation format

b. £19.0m

Heading reference: Statement of cash flows: the IAS 7 presentation format

c. £22.0m

Heading reference: Statement of cash flows: the IAS 7 presentation format

d. £32.4m

Heading reference: Statement of cash flows: the IAS 7 presentation format

Type: multiple choice question

Title: Chapter 06 Question 17

17) Investing Limited has a net increase in cash and cash equivalents of £22m, cash inflows from financing activities of £7m and cash inflows from operating activities of £39m. What is the cash outflow from investing activities?

a. £10m

Heading reference: Statement of cash flows: the IAS 7 presentation format

b. £24m

Heading reference: Statement of cash flows: the IAS 7 presentation format

c. £54m

Heading reference: Statement of cash flows: the IAS 7 presentation format

d. £68m

Heading reference: Statement of cash flows: the IAS 7 presentation format

Type: multiple choice question

Title: Chapter 06 Question 18

18) Murky Limited has a net decrease in cash and cash equivalents of £5m, cash inflows from financing activities of £30m and cash outflows from operating activities of £10m. What is the cash outflow from investing activities?

a. £45m

Heading reference: Statement of cash flows: the IAS 7 presentation format

b. £35m

Heading reference: Statement of cash flows: the IAS 7 presentation format

c. £25m

Heading reference: Statement of cash flows: the IAS 7 presentation format

d. £15m

Heading reference: Statement of cash flows: the IAS 7 presentation format

Type: multiple choice question

Title: Chapter 06 Question 19

19) Exe Limited acquired plant and machinery for use in its business at a cost of £50,000 two years ago. The plant and machinery was estimated to have a residual value of £10,000 and an estimated useful life of 5 years. The plant and machinery has been depreciated on the straight line basis. At the end of 2 years the plant and machinery was sold and a loss of £4,000 was made on the sale. What is the cash inflow from the sale of the plant and machinery that will be recorded under cash flows from investing activities?

a. £22,000

Heading reference:

Profits and losses on disposal of non-current assets

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

b. £26,000

Heading reference:

Profits and losses on disposal of non-current assets

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

c. £30,000

Heading reference:

Profits and losses on disposal of non-current assets

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

d. £38,000

Heading reference:

Profits and losses on disposal of non-current assets

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

Type: multiple choice question

Title: Chapter 06 Question 20

20) Three years ago, Wye Limited acquired plant and machinery for use in its business at a cost of £200,000. The plant and machinery was estimated to have a residual value of £33,600 and an estimated useful life of 5 years. The plant and machinery has been depreciated on the reducing balance basis at the rate of 30% per annum. At the end of 3 years the plant and machinery was sold and a profit of £11,400 was made on the sale. What is the cash inflow from the sale of the plant and machinery that will be recorded under cash flows from investing activities?

a. £57,200

Heading reference:

Profits and losses on disposal of non-current assets

Methods of depreciation: straight line and reducing balance

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

b. £61,640

Heading reference:

Profits and losses on disposal of non-current assets

Methods of depreciation: straight line and reducing balance

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

c. £80,000

Heading reference:

Profits and losses on disposal of non-current assets

Methods of depreciation: straight line and reducing balance

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

d. £112,075

Heading reference:

Profits and losses on disposal of non-current assets

Methods of depreciation: straight line and reducing balance

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

Type: multiple choice question

Title: Chapter 06 Question 21

21) Zed Limited acquired plant and machinery for use in its business at a cost of £80,000. The plant and machinery was estimated to have a residual value of £20,000 and an estimated useful life of 4 years. The plant and machinery has been depreciated on the straight line basis. 2 years and 6 months after the date of acquisition the plant and machinery was sold and a profit of £3,500 was made on the sale of this asset. What is the cash inflow from the sale of the plant and machinery that will be recorded under cash flows from investing activities?

a. £26,500

Heading reference:

Profits and losses on disposal of non-current assets

Methods of depreciation: straight line and reducing balance

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

b. £33,500

Heading reference:

Profits and losses on disposal of non-current assets

Methods of depreciation: straight line and reducing balance

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

c. £39,000

Heading reference:

Profits and losses on disposal of non-current assets

Methods of depreciation: straight line and reducing balance

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

d. £46,000

Heading reference:

Profits and losses on disposal of non-current assets

Methods of depreciation: straight line and reducing balance

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

Type: multiple choice question

Title: Chapter 06 Question 22

22) Ell Limited acquired plant and machinery for use in its business at a cost of £80,000. The plant and machinery was estimated to have a residual value of £20,000 and an estimated useful life of 4 years. The plant and machinery has been depreciated on the reducing balance basis at a rate of 29.50%. 2 years after the date of acquisition the plant and machinery was sold and a loss of £5,000 was made on the sale of this asset. What is the cash inflow from the sale of the plant and machinery that will be recorded under cash flows from investing activities?

a. £34,762

Heading reference:

Profits and losses on disposal of non-current assets

Methods of depreciation: straight line and reducing balance

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

b. £39,762

Heading reference:

Profits and losses on disposal of non-current assets

Methods of depreciation: straight line and reducing balance

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

c. £44,762

Heading reference:

Profits and losses on disposal of non-current assets

Methods of depreciation: straight line and reducing balance

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

d. £44,821

Heading reference:

Profits and losses on disposal of non-current assets

Methods of depreciation: straight line and reducing balance

The nominal ledger

The double entry to record disposals of non-current assets

Prepayments and accruals

Type: multiple choice question

Title: Chapter 06 Question 23

23) During the year ended 30 September 2021 Ricky Limited sold motor vehicles which had cost £20,000 three years ago, for £10,000. The total depreciation charged on these motor vehicles since they were purchased was £12,000 and the sale resulted in a profit on disposal of £2,000. Interest received during the year was £2,000 and interest paid was £5,000. Additions to property, plant and equipment during the year totalled £50,000 and payment for these new assets was in cash. This cash was paid out of the money raised from a share issue during the year which produced a cash inflow of £100,000. What is Ricky Limited’s cash flow from investing activities for the year ended 30 September 2021?

a. £57,000 inflow

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Prepayments and accruals

b. £54,000 inflow

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Prepayments and accruals

c. £46,000 outflow

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Prepayments and accruals

d. £38,000 outflow

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Prepayments and accruals

Type: multiple choice question

Title: Chapter 06 Question 24

24) During the year ended 31 December 2021 Billy Limited paid £60,000 to acquire new plant and equipment to replace assets that had originally cost £45,000 but which now had a carrying amount of £15,000. The replaced assets were sold for £18,000, realising a profit on sale of £3,000. During the year, interest received was £1,000 and £5,000 of interest was paid. What is Billy Limited’s net cash outflow from investing activities for the year ended 31 December 2021?

a. £41,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Prepayments and accruals

b. £46,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Prepayments and accruals

c. £47,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Prepayments and accruals

d. £49,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Prepayments and accruals

Type: multiple choice question

Title: Chapter 06 Question 25

25) Angela Limited undertook the following transactions during the year ended 31 March 2022:

 Paid £100,000 to acquire new property, plant and equipment.

 Sold redundant plant and equipment. The redundant plant and equipment had cost £35,000 and had a carrying amount of £20,000 at the date of disposal. The sale made a loss on disposal of £5,000.

 Received interest of £3,000 from the bank.

 Paid interest of £6,000 on a bank loan.

 Received dividends from BiG Plc of £2,000.

 Paid dividends of £25,000.

What is Angela Limited’s net cash outflow from investing activities for the year ended 31 March 2022?

a. £70,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Prepayments and accruals

b. £76,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Prepayments and accruals

c. £80,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Prepayments and accruals

d. £95,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Prepayments and accruals

Type: multiple choice question

Title: Chapter 06 Question 26

26) Taran Investments undertook the following transactions during the year ended 30 November 2021:

 Sold shares in Kish Limited for a profit of £50,000. The shares had originally cost £125,000 five years ago.

 Bought a new computer system for the offices at a cost of £80,000.

 Bought 100,000 shares in Jay Limited, a start up, at a cost of 90 pence per share.

 Received dividends from various investments totalling up to £85,000.

 Paid bonuses to the directors of £65,000.

What is Taran Investments’ net cash inflow from investing activities for the year ended 30 November 2021?

a. £25,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from operating activities

Cash flows from investing activities

b. £30,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from operating activities

Cash flows from investing activities

c. £80,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from operating activities

Cash flows from investing activities

d. £90,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from operating activities

Cash flows from investing activities

Type: true-false

Title: Chapter 06 Question 27

27) Interest received is classified under cash flows from financing activities.

a. True

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

b. False

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Type: true-false

Title: Chapter 06 Question 28

28) Dividends paid are classified under cash flows from financing activities to reflect the return expected by shareholders who finance the business through the purchase of shares.

a. True

Heading reference: Statement of cash flows: the IAS 7 presentation format, Cash flows from financing activities

b. False

Heading reference: Statement of cash flows: the IAS 7 presentation format, Cash flows from financing activities

Type: true-false

Title: Chapter 06 Question 29

29) Dividends received are classified under cash flows from financing activities while dividends paid are classified under cash flows from investing activities.

a. True

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

b. False

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Type: multiple choice question

Title: Chapter 06 Question 30

30) Which one of the following is not a cash flow from financing activities?

a. Cash received from a long term loan.

Heading reference: Statement of cash flows: the IAS 7 presentation format, Cash flows from financing activities

b. Cash received from the issue of share capital.

Heading reference: Statement of cash flows: the IAS 7 presentation format, Cash flows from financing activities

c. Cash paid to the bank to pay interest due on a loan.

Heading reference: Statement of cash flows: the IAS 7 presentation format, Cash flows from financing activities

d. Cash loaned to another company.

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Type: multiple choice question

Title: Chapter 06 Question 31

31) Which one of the following would be classified as a cash flow from financing activities in the statement of cash flows of a mining company?

a. Sale of an investment in a mining company in Chile.

Heading reference:

Statement of cash flows: the IAS 7 presentation format, Cash flows from investing activities

b. Dividends received.

Heading reference:

Statement of cash flows: the IAS 7 presentation format, Cash flows from investing activities

c. Repayment of a loan to the mining company.

Heading reference:

Statement of cash flows: the IAS 7 presentation format, Cash flows from investing activities

d. The repayment of a loan to the bank.

Heading reference: Statement of cash flows: the IAS 7 presentation format, Cash flows from financing activities

Type: multiple choice question

Title: Chapter 06 Question 32

32) During the financial year ended 31 May 2021, Brendan Limited raised £75,000 in cash from an issue of share capital and took out a new loan from the bank of £100,000. The proceeds of the share issue and the new loan were used in part to repay an existing bank loan of £150,000. A further £15,000 was raised from the sale of investments, realising a profit of £3,000 on the original cost and interest received contributed £5,000 while interest paid amounted to £10,000. Based on these figures, what is the net cash inflow from financing activities for the year ended 31 May 2021?

a. £15,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

b. £20,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

c. £23,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

d. £35,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Type: multiple choice question

Title: Chapter 06 Question 33

33) Olly Limited undertook the following transactions during the year ended 30 November 2021:

 Issued 20,000 new shares at a price of £1.50 per share.

 Made £6,000 of repayments on the business loan.

 Received dividends of £1,000 from Molly Limited.

 Paid loan interest of £750.

 Paid dividends of £10,000.

 Received £500 bank interest.

 Paid overdraft interest of £125.

What is Olly Limited’s net cash inflow from financing activities for the year ended 30 November 2021?

a. £3,125

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

b. £13,125

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

c. £13,625

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

d. £14,625

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Type: multiple choice question

Title: Chapter 06 Question 34

34) Collie Limited had the following cash inflows during the year ended 30 June 2021:

 Proceeds from the sale of investments of £200,000.

 Proceeds from the issue of shares of £250,000.

 Proceeds from the bond issue of £500,000.

 Proceeds from the sale of property, plant and equipment of £50,000.

What is Collie Limited’s total cash inflow from financing activities for the year ended 30 June 2021?

a. £250,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

b. £450,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

c. £750,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

d. £1,000,000

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Cash flows from investing activities

Cash flows from financing activities

Type: multiple choice question

Title: Chapter 06 Question 35

35) The statement of cash flows can be drawn up using either the direct method or the indirect method. Under the indirect method, the total inflows and outflows of cash from operations are ignored and the operating profit for a period is adjusted for increases or decreases in inventory, receivables, prepayments, payables and accruals and for the effect of non-cash items. Which one of the following statements is not true?

a. Under the indirect method, an increase in inventory is added to the operating profit for the accounting period.

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

b. Under the indirect method, an increase in trade payables is added to the operating profit for the accounting period.

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

c. Under the indirect method, depreciation is added to the operating profit for the accounting period.

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

d. Under the indirect method, an increase in provisions is added to the operating profit for the accounting period.

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

Type: multiple choice question

Title: Chapter 06 Question 36

36) The statement of cash flows can be drawn up using either the direct method or the indirect method. Under the indirect method, the total inflows and outflows from operations are ignored and the operating profit for a period is adjusted for increases or decreases in inventory, receivables, prepayments, payables and accruals and for the effect of non-cash items. Which one of the following statements is true?

a. Under the indirect method, an increase in trade receivables is added to the operating profit for the accounting period.

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

b. Under the indirect method, an increase in trade payables is deducted from the operating profit for the accounting period.

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

c. Under the indirect method, an increase in prepayments is deducted from the operating profit for the accounting period.

Heading reference: Preparing the statement of cash flows: the indirect method

d. Under the indirect method, a decrease in accruals is added to the operating profit for the accounting period.

cash outflows as more money has been spent on reducing these liabilities. This increase in cash outflows is therefore deducted from, not added to, operating profit in determining the cash inflows from operating activities.

Heading reference: Preparing the statement of cash flows: the indirect method

Type: multiple choice question

Title: Chapter 06 Question 37

37) The statement of cash flows can be drawn up using either the direct method or the indirect method. Under the indirect method, the total inflows and outflows from operations are ignored and the operating profit for a period is adjusted for increases or decreases in inventory, receivables, prepayments, payables and accruals and for the effect of non-cash items. Which one of the following statements is not true?

a. Under the indirect method, a loss on disposal of non-current asset investments is an addition to operating profit.

Heading reference: Statement of cash flows: the IAS 7 presentation format, The indirect method: cash flows from operating activities: inflows or outflows?

b. Under the indirect method, an increase in accruals is deducted from the operating profit for the accounting period.

Heading reference: Preparing the statement of cash flows: the indirect method

c. Under the indirect method, an increase in prepayments is deducted from the operating profit for the accounting period.

Heading reference: Preparing the statement of cash flows: the indirect method

d. Under the indirect method, an increase in inventory is deducted from the operating profit for the accounting period.

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

Type: true-false

Title: Chapter 06 Question 38

38) When using the indirect method in preparing the statement of cash flows, increases in inventory, trade receivables and prepayments are deducted from operating profit while decreases in trade payables, accruals and provisions are added to operating profit.

a. True

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

b. False

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

Type: true-false

Title: Chapter 06 Question 39

39) When using the indirect method in preparing the statement of cash flows, increases in inventory, trade receivables and prepayments are deducted from operating profit while increases in trade payables, accruals and provisions are added to operating profit.

a. True

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

b. False

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

Type: true-false

Title: Chapter 06 Question 40

40) When using the indirect method in preparing the statement of cash flows, decreases in inventory, trade receivables and prepayments are deducted from operating profit while increases in trade payables, accruals and provisions are added to operating profit.

a. True

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

b. False

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

Type: true-false

Title: Chapter 06 Question 41

41) When using the indirect method in preparing the statement of cash flows, decreases in inventory, trade receivables and prepayments are added to operating profit while decreases in trade payables, accruals and provisions are deducted from operating profit.

a. True

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

b. False

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

Type: multiple choice question

Title: Chapter 06 Question 42

42) Which one of the following account balances would not be classified as cash and cash equivalents in the financial statements of a grocery retailer?

a. Cash in the tills.

Heading reference: Cash and cash equivalents

b. Cash in a bank deposit account requiring 60 days’ notice for withdrawals.

Heading reference: Cash and cash equivalents

c. Cash in an investment bond repayable in 4 months’ time.

Heading reference: Cash and cash equivalents

d. Cash in the bank current account.

Heading reference: Cash and cash equivalents

Type: multiple choice question

Title: Chapter 06 Question 43

43) Which of the following statements is not true?

a. Profit does not equal cash.

Heading reference: Introduction, Profit ≠ cash

b. Without a steady inflow of cash, an entity will not be a going concern.

Heading reference: Introduction

c. Entities should aim to receive cash from sales after cash for expenses is paid out to maximize cash and minimize financing costs.

Heading reference: Profit ≠ cash

d. The statement of cash flows enables users of financial statements to determine how quickly profits are turned into cash.

Heading reference: Cash is cash is cash: the value of statements of cash flows

Type: multiple response question

Title: Chapter 06 Question 44

44) Under the indirect method of preparing the statement of cash flows: Please select all that apply.

Heading reference:

Statement of cash flows: the IAS 7 presentation format

Preparing the statement of cash flows: the direct method

Preparing the statement of cash flows: the indirect method

a. The operating profit for a period is adjusted for the effect of non-cash items.

b. The operating profit for a period is adjusted for increases or decreases in inventory, receivables, prepayments, payables and accruals.

c. All the cash inflows and outflows from operations are summarised to produce the net cash inflow or outflow from operating activities.

d. Total cash inflows and outflows from operations are ignored.

Type: true-false

Title: Chapter 06 Question 45

45) Both the statement of profit or loss and the statement of cash flows are drawn up on the accruals basis of accounting.

a. True

Heading reference: Cash is cash is cash: the value of statements of cash flows

b. False

Heading reference: Cash is cash is cash: the value of statements of cash flows

Type: multiple choice question

Title: Chapter 06 Question 46

46) Which one of the following statements is not true?

a. The provision of a statement of profit or loss together with a statement of cash flows enables users to see much more clearly how quickly profit is turned into cash.

Heading reference: Cash is cash is cash: the value of statements of cash flows

b. The provision of the statement of cash flows enables users of accounts to distinguish between different entities with the same level of profit.

Heading reference: Cash is cash is cash: the value of statements of cash flows

c. The statement of cash flows on its own can still tell us how profitable an organisation is and how quickly profits are being turned into cash.

Heading reference: Cash is cash is cash: the value of statements of cash flows

d. Statements of cash flows are not distorted by the effect of the accrual of income and expenditure into different accounting periods.

Heading reference: Cash is cash is cash: the value of statements of cash flows, Is the statement of cash flows enough on its own?

Type: multiple response question

Title: Chapter 06 Question 47

47) Which of the following statements are true? Please select all that apply.

Heading reference: Preparing the statement of cash flows: the indirect method, Prepayments and accruals

a. Depreciation is an accounting adjustment that allocates the cost of non-current assets to the accounting periods benefiting from their use.

b. Cash flows associated with non-current assets are the cash paid to acquire the assets.

c. Depreciation is not a cash flow.

d. Cash received on disposal of non-current assets when they are sold or scrapped at the end of their useful lives is not recognised in the statement of cash flows.

Type: multiple choice question

Title: Chapter 06 Question 48

48) Not anticipating profits until they have been earned through a sale is a description of which accounting principle or convention?

a. Accruals

Heading reference: The accruals basis of accounting, Accounting principles and conventions

b. Periodicity

Heading reference: Accounting principles and conventions

c. Prudence

Heading reference: The allowance for receivables, Accounting principles and conventions

d. Realization

Heading reference: Closing inventory, Accounting principles and conventions

Type: multiple choice question

Title: Chapter 06 Question 49

49) Being cautious and expecting less favourable outcomes describes which accounting principle or convention?

a. Realization

Heading reference: Closing inventory, Accounting principles and conventions

b. Prudence

Heading reference: The allowance for receivables, Accounting principles and conventions

c. Accruals

Heading reference: The accruals basis of accounting, Accounting principles and conventions

d. Historic cost

Heading reference: How are assets and liabilities valued?, Accounting principles and conventions

Type: multiple choice question

Title: Chapter 06 Question 50

50) The omission or misstatement of information in financial statements which could influence the decisions of users based on the financial information provided by an entity is a description of which accounting principle or convention?

a. Business entity

Heading reference:

The components of equity

Drawings and the business entity convention

Accounting principles and conventions

b. Money Measurement

Heading reference: What is accounting?, Accounting principles and conventions

c. Materiality

Heading reference: Materiality, Accounting principles and conventions

d. Consistency

Heading reference: What qualities should accounting information possess?, Accounting principles and conventions

Type: multiple choice question

Title: Chapter 06 Question 51

51) Keeping the affairs of a business and the affairs of the owner of that business totally separate describes which accounting principle or convention?

a. Business entity

Heading reference:

The components of equity

Drawings and the business entity convention

Accounting principles and conventions

b. Consistency

Heading reference: What qualities should accounting information possess?, Accounting principles and conventions

c. Dual aspect

Heading reference:

The dual aspect concept

Introduction (Chapter 4)

Accounting principles and conventions

d. Going concern

Heading reference: Introduction (Chapter 6), Accounting principles and conventions

Type: multiple choice question

Title: Chapter 06 Question 52

52) The recognition of all income and expenditure in the accounting period in which they occurred, rather than in the accounting period in which cash is received or paid, describes which accounting principle or convention?

a. Money measurement

Heading reference: What is accounting?, Accounting principles and conventions

b. Periodicity

Heading reference: Accounting principles and conventions

c. Dual aspect

Heading reference:

The dual aspect concept

Introduction (Chapter 4)

Accounting principles and conventions

d. Accruals

Heading reference: The accruals basis of accounting, Accounting principles and conventions

Type: multiple choice question

Title: Chapter 06 Question 53

53) The presentation or measurement of the same piece of accounting information on the same basis each year is a description of which accounting principle or convention?

a. Historic cost

Heading reference: How are assets and liabilities valued?, Accounting principles and conventions

b. Dual aspect

Heading reference:

The dual aspect concept

Introduction (Chapter 4)

Accounting principles and conventions

c. Consistency

Heading reference: What qualities should accounting information possess?, Accounting principles and conventions

d. Periodicity

Heading reference: Accounting principles and conventions

Type: multiple choice question

Title: Chapter 06 Question 54

54) The assumption that a business will continue in operational existence for the foreseeable future is a description of which accounting principle or convention?

a. Prudence

Heading reference: The allowance for receivables, Accounting principles and conventions

b. Going concern

Heading reference: Introduction (Chapter 6), Accounting principles and conventions

c. Realization

Heading reference: Closing inventory, Accounting principles and conventions

d. Business entity

Heading reference:

The components of equity

Drawings and the business entity convention

Accounting principles and conventions

Title: Chapter 06 Question 55

55) Recording all assets and liabilities at their original cost to the business is a description of which accounting principle or convention?

a. Historic cost

Heading reference: How are assets and liabilities valued?, Accounting principles and conventions

b. Consistency

Heading reference: What qualities should accounting information possess?, Accounting principles and conventions

c. Prudence

Heading reference: The allowance for receivables, Accounting principles and conventions

d. Money measurement

Heading reference: What is accounting?, Accounting principles and conventions

Type: multiple choice question

Title: Chapter 06 Question 56

56) Two figures change each time a new transaction is undertaken. Which accounting principle or convention does this statement describe?

a. Realization

Heading reference: Closing inventory, Accounting principles and conventions

b. Money measurement

Heading reference: What is accounting?, Accounting principles and conventions

c. Accruals

Heading reference: The accruals basis of accounting, Accounting principles and conventions

d. Dual aspect

Heading reference:

The dual aspect concept

Introduction (Chapter 4)

Accounting principles and conventions

Type: multiple choice question

Title: Chapter 06 Question 57

57) The statement of cash flows can be presented using either the direct or the indirect methods. Using figures from the statement of profit or loss and the statement of financial position, cash received from sales can be calculated as the balancing figure on the trade receivables control account. Which one of the following is the correct method by which to calculate cash received from sales when using this approach?

a. Cash received from sales = sales – trade receivables brought forward + trade receivables carried forward.

Therefore, the correct formula for calculating cash received from sales is sales + trade receivables brought forward (= trade receivables at the start of the year, opening trade receivables) – trade receivables carried forward (= trade receivables at the end of the year, closing trade receivables).

Heading reference: Calculating cash received from the trade receivables control account

b. Cash received from sales = sales + trade receivables brought forward – trade receivables carried forward.

Therefore, the correct formula for calculating cash received from sales is sales + trade receivables brought forward (= trade receivables at the start of the year, opening trade receivables) – trade receivables carried forward (= trade receivables at the end of the year, closing trade receivables).

Heading reference: Calculating cash received from the trade receivables control account

c. Cash received from sales = sales + trade receivables brought forward + trade receivables carried forward.

Therefore, the correct formula for calculating cash received from sales is sales + trade receivables brought forward (= trade receivables at the start of the year, opening trade receivables) – trade receivables carried forward (= trade receivables at the end of the year, closing trade receivables).

Heading reference: Calculating cash received from the trade receivables control account

d. Cash received from sales = sales – trade receivables brought forward –trade receivables carried forward.

Therefore, the correct formula for calculating cash received from sales is sales + trade receivables brought forward (= trade receivables at the start of the year, opening trade receivables) – trade receivables carried forward (= trade receivables at the end of the year, closing trade receivables).

Heading reference: Calculating cash received from the trade receivables control account

Type: multiple choice question

Title: Chapter 06 Question 58

58) Pollonia Limited draws up its statement of cash flows using the direct method. At 1 September 2020, the company had trade receivables of £75,343. During the year to 31 August 2021, the company made sales of £745,282. At 31 August 2021, the company’s trade receivables totalled up to £83,897. What was the cash received from sales during the year to 31 August 2021?

a. £736,728

Cash received from sales in the financial year to 31 August 2021 = £75,343 (trade receivables at the start of the year) + £745,282 (sales made during the year) – £83,897 (trade receivables at the end of the year) = £736,728. You have correctly reconstructed the trade receivables control account to determine the cash received from sales for the year.

Heading reference: Calculating cash received from the trade receivables control account

b. £745,282

Cash received from sales in the financial year to 31 August 2021 = £75,343 (trade receivables at the start of the year) + £745,282 (sales made during the year) – £83,897 (trade receivables at the end of the year) = £736,728. £745,282 is just the sales figure for the year which must be adjusted for the effect of trade receivables at the start and end of the year to calculate cash received.

Heading reference: Calculating cash received from the trade receivables control account

c. £753,836

Cash received from sales in the financial year to 31 August 2021 = £75,343 (trade receivables at the start of the year) + £745,282 (sales made during the year) – £83,897 (trade receivables at the end of the year) = £736,728. This answer deducts opening trade receivables from sales and adds closing trade receivables to sales.

Heading reference: Calculating cash received from the trade receivables control account

d. £904,522

Cash received from sales in the financial year to 31 August 2021 = £75,343 (trade receivables at the start of the year) + £745,282 (sales made during the year) – £83,897 (trade receivables at the end of the year) = £736,728. This answer adds both opening and closing trade receivables to sales.

Heading reference: Calculating cash received from the trade receivables control account

Type: multiple choice question

Title: Chapter 06 Question 59

59) Juno Limited draws up its statement of cash flows using the direct method. The company presents you with the following figures:

What was the cash received from sales for the year to 31 July 2021?

a. £358,462

Cash received from sales in the financial year to 31 July 2021 = £80,200 (trade receivables at the start of the year) + £365,268 (sales made during the year) – £77,159 (trade receivables at the end of the year) – £3,765 (irrecoverable debts written off during the year) = £364,544. You have incorrectly added closing receivables to and deducted opening receivables from sales.

Heading reference: Calculating cash received from the trade receivables control account

b. £362,227

Cash received from sales in the financial year to 31 July 2021 = £80,200 (trade receivables at the start of the year) + £365,268 (sales made during the year) – £77,159 (trade receivables at the end of the year) – £3,765 (irrecoverable debts written off during the year) = £364,544. You have incorrectly added closing receivables to and deducted opening receivables from sales and failed to take account of irrecoverable debts.

Heading reference: Calculating cash received from the trade receivables control account

c. £364,544

Cash received from sales in the financial year to 31 July 2021 = £80,200 (trade receivables at the start of the year) + £365,268 (sales made during the year) – £77,159 (trade receivables at the end of the year) – £3,765 (irrecoverable debts written off during the year) = £364,544. You have used all the figures correctly to calculate cash received from sales.

Heading reference: Calculating cash received from the trade receivables control account

d. £372,074

Cash received from sales in the financial year to 31 July 2021 = £80,200 (trade receivables at the start of the year) + £365,268 (sales made during the year) – £77,159 (trade receivables at the end of the year) – £3,765 (irrecoverable debts written off during the year) = £364,544. You have incorrectly added irrecoverable debts to sales when you should have credited them to the trade receivables control account.

Heading reference: Calculating cash received from the trade receivables control account

Type: multiple choice question

Title: Chapter 06 Question 60

60) Artemis Limited draws up its statement of cash flows using the direct method. The company presents you with the following figures:

What was the cash received from sales for the year to 31 May 2021?

a. £543,000

Cash received from sales in the financial year to 31 May 2021 = £68,000 (trade receivables at the start of the year) + £550,000 (sales made during the year) – £75,000 (trade receivables at the end of the year) = £543,000. You have correctly ignored the allowance for receivables in your calculations.

Heading reference: Calculating cash received from the trade receivables control account

b. £546,000

Cash received from sales in the financial year to 31 May 2021 = £68,000 (trade receivables at the start of the year) + £550,000 (sales made during the year) – £75,000 (trade receivables at the end of the year) = £543,000. Your answer has incorrectly deducted the allowance for receivables from opening and closing trade receivables.

Heading reference: Calculating cash received from the trade receivables control account

c. £554,000

Cash received from sales in the year to 31 May 2021 = £68,000 (trade receivables at the start of the year) + £550,000 (sales made during the year) – £75,000 (trade receivables at the end of the year) = £543,000. Your answer has incorrectly deducted the allowance for receivables from opening and closing trade receivables and added closing receivables to and deducted opening receivables from sales.

Heading reference: Calculating cash received from the trade receivables control account

d. £557,000

Cash received from sales in the financial year to 31 May 2021 = £68,000 (trade receivables at the start of the year) + £550,000 (sales made during the year) – £75,000 (trade receivables at the end of the year) = £543,000. You have correctly ignored the allowance for receivables but have incorrectly added closing receivables to and deducted opening receivables from sales.

Heading reference: Calculating cash received from the trade receivables control account

Type: multiple choice question

Title: Chapter 06 Question 61

61) Volsinii Limited draws up its statement of cash flows using the direct method. The company presents the following balances in its financial statements for the years ended 31 October 2021 and 31 October 2020:

Based on these figures, how much cash was paid to suppliers (trade payables) during the financial year ended 31 October 2021?

a. £533,500

Heading reference: Calculating cash paid to suppliers from the trade payables control account

b. £540,500

Heading reference: Calculating cash paid to suppliers from the trade payables control account

c. £547,500

Heading reference: Calculating cash paid to suppliers from the trade payables control account

d. £556,500

Heading reference: Calculating cash paid to suppliers from the trade payables control account

Type: multiple choice question

Title: Chapter 06 Question 62

62) Lars Limited draws up its statement of cash flows using the direct method. The company presents you with the following figures:

What was the cash paid to suppliers during the financial year to 31 May 2021?

a. £344,085

Cash paid to suppliers in the financial year to 31 May 2021 = £44,815 (trade payables at the start of the year) + £375,000 (purchases made during the year) – £22,500 (purchase returns) – £6,250 (discounts received) – £42,650 (trade payables at the end of the year) = £348,415. Your answer adds trade payables at the end of the year to purchases and deducts trade payables at the start of the year.

Heading reference: Calculating cash paid to suppliers from the trade payables control account

b. £348,415

Cash paid to suppliers in the financial year to 31 May 2021 = £44,815 (trade payables at the start of the year) + £375,000 (purchases made during the year) – £22,500 (purchase returns) – £6,250 (discounts received) – £42,650 (trade payables at the end of the year) = £348,415.

Heading reference: Calculating cash paid to suppliers from the trade payables control account

c. £356,585

Cash paid to suppliers in the financial year to 31 May 2021 = £44,815 (trade payables at the start of the year) + £375,000 (purchases made during the year) – £22,500 (purchase returns) – £6,250 (discounts received) – £42,650 (trade payables at the end of the year) = £348,415. Your answer deducts (purchase returns + opening trade payables) from (purchases + closing trade payables + discounts received).

Heading reference: Calculating cash paid to suppliers from the trade payables control account

d. £360,915

Cash paid to suppliers in the financial year to 31 May 2021 = £44,815 (trade payables at the start of the year) + £375,000 (purchases made during the year) – £22,500 (purchase returns) – £6,250 (discounts received) – £42,650 (trade payables at the end of the year) = £348,415. Your answer adds discounts received to opening trade payables and purchases.

Heading reference: Calculating cash paid to suppliers from the trade payables control account

Type: multiple choice question

Title: Chapter 06 Question 63

63) Ardea Limited draws up its statement of cash flows using the direct method. The company presents the following balances in its financial statements for the years ended 31 May 2021 and 31 May 2020:

Based on these figures, how much cash was paid to suppliers (trade payables) during the financial year ended 31 May 2021?

a. £764,882

Heading reference: Calculating cash paid to suppliers from the trade payables control account

b. £765,596

Heading reference: Calculating cash paid to suppliers from the trade payables control account

c. £767,929

Heading reference: Calculating cash paid to suppliers from the trade payables control account

d. £770,976

Heading reference: Calculating cash paid to suppliers from the trade payables control account

Type: multiple choice question

Title: Chapter 06 Question 64

64) Antium Limited draws up its statement of cash flows using the direct method. The company presents you with the following figures:

What was the cash paid to suppliers during the financial year to 30 April 2021?

a. £843,159

Cash paid to suppliers in the financial year to 30 April 2021 = £78,650 (trade payables at the start of the year) + £894,321 (purchases made during the year) – £32,777 (purchase returns) – £10,225 (discounts received) – £81,254 (trade payables at the end of the year) = £848,715. You incorrectly used cost of sales instead of purchases in your calculations.

Heading reference: Calculating cash paid to suppliers from the trade payables control account

b. £848,715

Cash paid to suppliers in the financial year to 30 April 2021 = £78,650 (trade payables at the start of the year) + £894,321 (purchases made during the year) – £32,777 (purchase returns) – £10,225 (discounts received) – £81,254 (trade payables at the end of the year) = £848,715.

Heading reference: Calculating cash paid to suppliers from the trade payables control account

c. £853,923

Cash paid to suppliers in the financial year to 30 April 2021 = £78,650 (trade payables at the start of the year) + £894,321 (purchases made during the year) – £32,777 (purchase returns) – £10,225 (discounts received) – £81,254 (trade payables at the end of the year) = £848,715. Your answer adds trade payables at the end of the year to purchases and deducts trade payables at the start of the year.

Heading reference: Calculating cash paid to suppliers from the trade payables control account

d. £869,165

Cash paid to suppliers in the financial year to 30 April 2021 = £78,650 (trade payables at the start of the year) + £894,321 (purchases made during the year) – £32,777 (purchase returns) – £10,225 (discounts received) – £81,254 (trade payables at the end of the year) = £848,715. Your answer credited rather than debited discounts received to the control account.

Heading reference: Calculating cash paid to suppliers from the trade payables control account

Type: multiple choice question

Title: Chapter 06 Question 65

65) Tibur Limited draws up its statement of cash flows using the direct method. The company presents you with the following figures:

What was the cash paid for expenses during the financial year to 31 December 2021?

a. £12,766

Check your answer to determine where your calculations and postings to the T account were incorrect.

Heading reference: Calculating cash paid for expenses using the expenses T account

b. £14,792

Heading reference: Calculating cash paid for expenses using the expenses T account

c. £15,352

Check your answer to determine where your calculations and postings to the T account were incorrect.

Heading reference: Calculating cash paid for expenses using the expenses T account

d. £17,378

Check your answer to determine where your calculations and postings to the T account were incorrect.

Heading reference: Calculating cash paid for expenses using the expenses T account

Type: multiple choice question

Title: Chapter 06 Question 66

66) Gabii Limited draws up its statement of cash flows using the direct method. The company presents the following balances in its financial statements for the years ended 31 March 2022 and 31 March 2021:

Based on these figures, what cash payments were made for expenses in the financial year ended 31 May 2022?

a. £75,882

Check your answer to determine where your calculations and postings to the T account were incorrect.

Heading reference: Calculating cash paid for expenses using the expenses T account

b. £76,286

Check your answer to determine where your calculations and postings to the T account were incorrect.

Heading reference: Calculating cash paid for expenses using the expenses T account

c. £78,814

Heading reference: Calculating cash paid for expenses using the expenses T account

d. £78,880

Check your answer to determine where your calculations and postings to the T account were incorrect.

Heading reference: Calculating cash paid for expenses using the expenses T account

Type: multiple choice question

Title: Chapter 06 Question 67

67) Nola Limited draws up its statement of cash flows using the direct method. The company presents the following balances in its financial statements for the years ended 31 May 2021 and 31 May 2020:

Based on these figures, what was the cash paid for expenses in the financial year ended 31 May 2021?

a. £81, 547

Heading reference: Calculating cash paid for expenses using the expenses T account

b. £84,609

You have posted the opening and closing prepayments and accruals to the incorrect sides of the expenses T account.

Heading reference: Calculating cash paid for expenses using the expenses T account

c. £84,647

You have debited the difference between the two irrecoverable debt figures to the expenses T account: this would have been correct had the question given the allowance for receivables figure at the end of both years.

Heading reference: Calculating cash paid for expenses using the expenses T account

d. £89,947

You have credited instead of debiting the irrecoverable debts figure for 2021 to the expenses T account.

Heading reference: Calculating cash paid for expenses using the expenses T account

Type: multiple choice question

Title: Chapter 06 Question 68

68) Pompeii Limited draws up its statement of cash flows using the direct method. The company presents the following balances in its financial statements for the years ended 28 February 2022 and 28 February 2021:

Based on these figures, what was the cash paid for expenses in the financial year ended 28 February 2022?

a. £83,100

Your answer has debited all of the £2,400 allowance for receivables to the expenses account instead of just the increase in the allowance of £1,200.

Heading reference: Calculating cash paid for expenses using the expenses T account

b. £83,400

Irrecoverable debts recovered are credited not debited to the expenses account.

Heading reference: Calculating cash paid for expenses using the expenses T account

c. £84,300

You have correctly recognized that irrecoverable debts recovered are credited not debited to the expenses account.

Heading reference: Calculating cash paid for expenses using the expenses T account

d. £85,800

Irrecoverable debts recovered are credited not debited to the expenses account. The increase in the allowance for receivables is debited not credited to the expenses T account.

Heading reference: Calculating cash paid for expenses using the expenses T account

Type: multiple choice question

Title: Chapter 06 Question 69

69) Capri Limited presents the following balances in its financial statements for the years ended 31 October 2021 and 31 October 2020:

Based on these figures, what was the cash paid to acquire property, plant and equipment in the financial year ended 31 October 2021?

a. £12,814

Your answer debited instead of crediting the depreciation charge for the year to the property, plant and equipment account.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

b. £200,332

Your answer debited instead of crediting the disposals carrying amount to the property, plant and equipment account.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

c. £221,514

Your answer used the depreciation charge for the year to 31 October 2020 instead of the depreciation charge for the year to 31 October 2021.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

d. £234,976

Your answer makes all the correct entries in the property, plant and equipment account.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

Type: multiple choice question

Title: Chapter 06 Question 70

70) At 1 December 2020, the property, plant and equipment of Ostia Limited had a carrying value of £432,798. During the year ended 30 November 2021, £88,996 of depreciation was charged on property, plant and equipment. The company received cash of £15,325 during the year from the sale of various items of property, plant and equipment The items of property, plant and equipment sold had cost £25,000 and depreciation of £12,225 had been charged on these items of property, plant and equipment up to the date of disposal. At 30 November 2021, the property, plant and equipment had a carrying amount of £440,452.

Based on these figures, how much cash was paid to acquire property, plant and equipment in the financial year ended 30 November 2021?

a. £108,875

Your answer used the accumulated depreciation charged on the property, plant and equipment disposed of instead of using the carrying amount of these assets at the date of disposal (cost – accumulated depreciation to the date of disposal) in constructing your property, plant and equipment account.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

b. £109,425

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

c. £111,975

Your answer used the cash received from the disposal of property, plant and equipment instead of using the carrying amount of these assets at the date of disposal (cost – accumulated depreciation to the date of disposal) in constructing your property, plant and equipment account.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

d. £121,650

Your answer used the cost of property, plant and equipment disposed of instead of using the carrying amount of these assets at the date of disposal (cost – accumulated depreciation to the date of disposal) in constructing your property, plant and equipment account.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

Type: multiple choice question

Title: Chapter 06 Question 71

71) At 1 September 2020, the property, plant and equipment of Tusculum Limited had a carrying value of £379,149. During the year ended 31 August 2021, additions with a cost of £167,382 were made. The company sold various items of property, plant and equipment during the year. These items of property, plant and equipment sold had a carrying amount of £25,491 at the date of disposal. At 31 August 2021, the property, plant and equipment had a carrying amount of £422,185.

Based on these figures, how much depreciation was charged on property, plant and equipment in the financial year ended 31 August 2021?

a. £98,855

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

b. £149,837

Your answer debited instead of crediting the disposals carrying amount to the property, plant and equipment account.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

c. £184,927

Your answer debited instead of crediting the disposals carrying amount and credited instead of debiting the cash paid for additions to the property, plant and equipment account.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

d. £235,909

Your answer credited instead of debiting the cash paid for additions to the property, plant and equipment account. This answer attempts to calculate the cash paid for additions not the depreciation charged on property, plant and equipment during the year.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

Type: true-false

Title: Chapter 06 Question 72

72) Additions to property, plant and equipment are debited to the property, plant and equipment T account. The cash paid to acquire property, plant and equipment is always the same as the additions figure in the property, plant and equipment account.

a. True

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

b. False

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

Type: multiple choice question

Title: Chapter 06 Question 73

73) At 1 June 2020, the property, plant and equipment (PPE) of Alba Limited had a carrying value of £848,149. During the year ended 31 May 2021, depreciation of £248,322 was charged on PPE and the company sold various items of PPE with a carrying amount of £34,977 at the date of disposal. At 31 May 2021, the PPE had a carrying amount of £685,482. At 1 June 2020, trade payables for purchases of PPE amounted to £20,351. At 31 May 2021, trade payables for purchases of PPE totalled up to £15,419.

Based on this information, what figure for cash payments to acquire property, plant and equipment will appear in the statement of cash flows of Alba Limited for the financial year ended 31 May 2021?

a. £105,213

To find the cash paid during the year to acquire property, plant and equipment, the trade payables at the start of the year are added to additions and the trade payables at the end of the year are deducted from additions. Cash paid to acquire PPE during the year is thus £20,351 + £120,632 – £15,419 = £125,564. Your answer correctly deducted trade payables for purchases of PPE at 31 May 2021 but did not add on trade payables for purchases of PPE at 1 June 2020.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

b. £115,700

To find the cash paid during the year to acquire property, plant and equipment, the trade payables at the start of the year are added to additions and the trade payables at the end of the year are deducted from additions. Cash paid to acquire PPE during the year is thus £20,351 + £120,632 – £15,419 = £125,564. Your answer incorrectly added trade payables for purchases of PPE at 31 May 2021 and deducted trade payables for purchases of PPE at 1 June 2020.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

c. £120,632

To find the cash paid during the year to acquire property, plant and equipment, the trade payables at the start of the year are added to additions and the trade payables at the end of the year are deducted from additions. Cash paid to acquire PPE during the year is thus £20,351 + £120,632 – £15,419 = £125,564. Your answer is just the additions for the year without any adjustments to reflect the effect of the opening and closing trade payables on the cash paid to acquire PPE.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

d. £125,564

To find the cash paid during the year to acquire property, plant and equipment, the trade payables at the start of the year are added to additions and the trade payables at the end of the year are deducted from additions. Cash paid to acquire PPE during the year is thus £20,351 + £120,632 – £15,419 = £125,564.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

Type: multiple choice question

Title: Chapter 06 Question 74

74) At 1 April 2020, the property, plant and equipment (PPE) of Tarracina Limited had a carrying value of £676,419. During the year ended 31 March 2021, depreciation of £174,220 was charged on PPE and the company sold various items of PPE with a carrying amount of £20,114 at the date of disposal. At 31 March 2021, the PPE had a carrying amount of £720,333. At 1 April 2020 and 31 March 2021, trade payables for purchases of PPE amounted to £48,721 and £55,993 respectively.

Based on this information, what figure for cash payments to acquire property, plant and equipment will appear in the statement of cash flows of Tarracina Limited for the financial year ended 31 March 2021?

a. £230,976

To find the cash paid during the year to acquire property, plant and equipment, trade payables at the start of the year are added to and trade payables at the end of the year are deducted from additions. Cash paid to acquire PPE during the year is thus £48,721 + £238,248 – £55,993 = £230,976.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

b. £238,248

To find the cash paid during the year to acquire property, plant and equipment, trade payables at the start of the year are added to and trade payables at the end of the year are deducted from additions. Cash paid to acquire PPE during the year is thus £48,721 + £238,248 – £55,993 = £230,976. Your answer is just the additions for the year without making any adjustments to reflect the effect of the opening and closing trade payables on the cash paid to acquire PPE.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

c. £245,520

To find the cash paid during the year to acquire property, plant and equipment, trade payables at the start of the year are added to and trade payables at the end of the year are deducted from additions. Cash paid to acquire PPE during the year is thus £48,721 + £238,248 – £55,993 = £230,976. Your answer has incorrectly added trade payables at the end of the year to and deducted trade payables at the start of the year from the figure for additions.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

d. £342,962

To find the cash paid during the year to acquire property, plant and equipment, trade payables at the start of the year are added to and trade payables at the end of the year are deducted from additions. Cash paid to acquire PPE during the year is thus £48,721 + £238,248 – £55,993 = £230,976. Your answer has incorrectly added both trade payables at the start and end of the year to the additions figure.

Heading reference: Appendix: further uses for T accounts in the calculation of figures to include in the statement of cash flows, 1 Property, plant and equipment

Type: multiple choice question

Title: Chapter 06 Question 75

75) At 1 September 2020, Cremona Limited had a taxation liability of £25,734. At 31 August 2021, the company’s taxation liability stood at £28,321. The statement of profit or loss for the financial year ended 31 August 2021 showed an income tax charge for the year of £30,429. Based on this information, what figure for cash paid for taxation will appear in the statement of cash flows of Cremona Limited for the financial year ended 31 August 2021?

a. £23,626

Your answer incorrectly added the opening and closing taxation liabilities and deducted the statement of profit or loss taxation charge in calculating the taxation paid during the year.

Heading reference: 2 Tax paid during the year

b. £27,842

Heading reference: 2 Tax paid during the year

c. £30,429

Your answer is just the statement of profit or loss taxation charge. To find the taxation paid, this figure has to be adjusted for the effect of the opening and closing liabilities to determine the cash payment made.

Heading reference: 2 Tax paid during the year

d. £33,016

Your answer incorrectly added the closing liability to the statement of profit or loss taxation charge and then deducted the opening liability in calculating the taxation paid during the year.

Heading reference: 2 Tax paid during the year

Type: multiple choice question

Title: Chapter 06 Question 76

76) Frusino Limited presents the following balances in its financial statements for the years ended 28 February 2022 and 28 February 2021:

Based on these figures, what was the cash paid for taxation that will appear in the statement of cash flows of Frusino Limited for the financial year ended 28 February 2022?

a. £32,374

Your answer incorrectly added the liability at the end of the year to the statement of profit or loss taxation charge and then deducted the liability at the start of the year.

Heading reference: 2 Tax paid during the year

b. £37,318

Heading reference: 2 Tax paid during the year

c. £39,120

Your answer incorrectly added the liabilities at both the start and at the end of the year and then deducted the statement of profit or loss income tax charge for the year to 28 February 2022.

Heading reference: 2 Tax paid during the year

d. £39,776

Your answer incorrectly used the statement of profit or loss income tax charge for the year to 28 February 2021 instead of the statement of profit or loss income tax charge for the year to 28 February 2022.

Heading reference: 2 Tax paid during the year

Type: multiple choice question

Title: Chapter 06 Question 78

78) Norba Limited presents the following balances in its financial statements for the years ended 31 July 2021 and 31 July 2020:

Based on these figures, what was the total cash paid by Norba Limited for taxation in the financial year ended 31 July 2021?

a. £13,033

Your answer incorrectly used the statement of profit or loss income tax charge for the year to 31 July 2020 instead of the statement of profit or loss income tax charge for the year to 31 July 2021. You did, however, correctly recognize that the double entry for an income tax refund is Debit cash, Credit taxation account.

Heading reference: 2 Tax paid during the year

b. £20,775

Your answer incorrectly debited the cash received from the income tax refund to the taxation account. The double entry for an income tax refund received requires a debit to the cash (bank) account as this asset has increased and a credit to the income tax account.

Heading reference: 2 Tax paid during the year

c. £21,095

Your answer nets off the taxation paid and the cash received from the income tax refund. The question requires the total cash paid for taxation not the net amount paid. You did, however, correctly recognize that the double entry for an income tax refund is Debit cash, Credit taxation account.

Heading reference: 2 Tax paid during the year

d. £21,415

You correctly recognized that the double entry for an income tax refund is Debit cash, Credit taxation account.

Heading reference: 2 Tax paid during the year

Type: multiple choice question

Title: Chapter 06 Question 79

79) At 31 December 2020, the balance on Caere Limited’s retained earnings stood at £51,700. During the year ended 31 December 2021, the company made a profit for the year of £57,400. The balance on Caere Limited’s retained earnings at 31 December 2021 was £58,900. How much was the cash dividend paid by the company during the financial year ended 31 December 2021?

a. £7,200

Your answer incorrectly takes the difference between the opening and closing retained earnings while ignoring the profit for the financial year.

Heading reference: 3 Dividends paid

b. £50,200

Heading reference: 3 Dividends paid

c. £53,200

Your answer incorrectly adds the opening and closing balances while deducting the profit for the year.

Heading reference: 3 Dividends paid

d. £64,600

Your answer incorrectly adds the retained earnings closing balance and the profit for the year while deducting the retained earnings opening balance.

Heading reference: 3 Dividends paid

Type: multiple choice question

Title: Chapter 06 Question 80

80) At 31 October 2020, the balance on Setium Limited’s retained earnings stood at £107,800. During the year ended 31 October 2021, the company made a loss for the year of £18,500. The balance on Setium Limited’s retained earnings at 31 October 2021 was £75,500. How much was the cash dividend paid by the company during the financial year ended 31 October 2021?

a. £13,800

Heading reference: 3 Dividends paid

b. £32,300

Your answer incorrectly calculates the difference between the opening and closing retained earnings balances while ignoring the retained loss for the year completely.

Heading reference: 3 Dividends paid

c. £50,800

Your answer incorrectly treats the loss for the year as an increase (credit) not a decrease (debit) in the balance on the retained earnings account.

Heading reference: 3 Dividends paid

d. £164,800

Your answer incorrectly adds the opening and closing balances on the retained earnings account and deducts the loss for the year.

Heading reference: 3 Dividends paid

Type: multiple choice question

Title: Chapter 06 Question 81

81) Neapolis Limited has 40,000 shares in issue. On 31 August 2020, the company declared a final dividend for the financial year ended 31 August 2020 of 25 pence per share. This final dividend was paid on 31 October 2020. On 1 February 2021, the company declared an interim dividend of 10 pence per share with this dividend being paid to shareholders on 30 April 2021. On 31 August 2021, the company declared a final dividend for the year ended 31 August 2021 of 35 pence per share, this final dividend to be paid on 31 October 2021. What figure will Neapolis Limited present in its statement of cash flows for the financial year ended 31 August 2021 for dividends paid during the year?

a. £10,000

Heading reference: 3 Dividends paid

b. £14,000

Heading reference: 3 Dividends paid

c. £18,000

Heading reference: 3 Dividends paid

d. £28,000

Heading reference: 3 Dividends paid

Type: multiple choice question

Title: Chapter 06 Question 82

82) Arpinum Limited presents the following balances in its financial statements for the years ended 31 July 2021 and 31 July 2020:

Based on these figures, what interest received figure will be disclosed by Arpinum Limited in its statement of cash flows for the financial year ended 31 July 2021?

a. £442

Your answer incorrectly deducted the interest receivable figures at both the start and at the end of the year from the statement of profit or loss interest receivable figure for the year (£542 – £45 – £55 instead of £542 + £45 – £55).

Heading reference: 4 Interest received (finance income)

b. £512

Your answer incorrectly used the statement of profit or loss interest receivable figure for the year to 31 July 2020 instead of the statement of profit or loss interest receivable figure for the year to 31 July 2021.

Heading reference: 4 Interest received (finance income)

c. £532

Heading reference: 4 Interest received (finance income)

d. £552

Your answer incorrectly added the interest receivable at the end of the year and deducted the interest receivable at the start of the year (£542 + £55 – £45 instead of £542 + £45 – £55).

Heading reference: 4 Interest received (finance income)

Type: multiple choice question

Title: Chapter 06 Question 83

83) At 1 November 2020, Sora Limited had interest receivable of £74. The statement of profit or loss for the year to 31 October 2021 presents a figure of £735 for interest receivable (finance income). At 31 October 2021, Sora Limited had accrued interest receivable of £61 owing to the company. Based on these figures, what interest received figure will be disclosed by Sora Limited for interest received in its statement of cash flows for the financial year ended 31 October 2021?

a. £600

Your answer incorrectly deducted the interest receivable figures at both the start and at the end of the year from the statement of profit or loss interest receivable figure for the year (£735 – £74 – £61 instead of £735 + £74 – £61).

Heading reference: 4 Interest received (finance income)

b. £722

Your answer incorrectly added the interest receivable figure at the end of the year to the statement of profit or loss interest receivable figure for the year and deducted the interest receivable figure at the start of the year from the statement of profit or loss interest receivable figure for the year (£735 – £74 + £61 instead of £735 + £74 – £61).

Heading reference: 4 Interest received (finance income)

c. £735

Your answer is just the interest receivable (finance income) presented in the statement of profit or loss. This figure has to be adjusted to take account of the effects of the interest receivable balances at the start and end of the financial year on the cash received from interest during the year.

Heading reference: 4 Interest received (finance income) d. £748

Heading reference: 4 Interest received (finance income)

Type: multiple choice question

Title: Chapter 06 Question 84

84) Cortona Limited presents the following balances in its financial statements for the years ended 30 September 2021 and 30 September 2020:

Based on these figures, what interest receivable (finance income) figure will be disclosed by Cortona Limited in its statement of profit or loss for the financial year ended 30 September 2021?

a. £808

Your answer incorrectly used the interest received for the year ended 30 September 2020 instead of the interest received for the year ended 30 September 2021 (£828 + £68 – £88 instead of £848 + £68 – £88).

Heading reference: 4 Interest received (finance income)

b. £828

Heading reference: 4 Interest received (finance income)

c. £868

Your answer incorrectly added the interest receivable at 1 October 2020 to cash received and deducted the interest receivable at 30 September 2021 (£848 + £88 – £68 instead of £848 + £68 – £88).

Heading reference: 4 Interest received (finance income)

d. £1,004

Your answer incorrectly added the interest receivable at both 1 October 2020 and 30 September 2021 to the interest received in the year to 30 September 2021 (£848 + £68 + £88 instead of £848 + £68 – £88).

Heading reference: 4 Interest received (finance income)

Type: multiple choice question

Title: Chapter 06 Question 85

85) Perusia Limited presents the following balances in its financial statements for the years ended 31 March 2022 and 31 March 2021:

Based on these figures, what interest paid figure will be disclosed by Perusia Limited in its statement of cash flows for the financial year ended 31 March 2022?

a. £12,476

Your answer incorrectly used the statement of profit or loss interest payable figure for the year ended 31 March 2021 instead of the statement of profit or loss interest payable figure for the year ended 31 March 2022 (£988 + £12,572 – £1,084 instead of £988 + £13,108 – £1,084).

Heading reference: 5 Interest paid (finance expense)

b. £13,012

Heading reference: 5 Interest paid (finance expense)

c. £13,108

Your answer just used the statement of profit or loss finance expense for the year ended 31 March 2022. This figure has to be adjusted for the opening and closing accruals for interest payable in order to calculate the cash actually paid during the year.

Heading reference: 5 Interest paid (finance expense)

d. £13,204

Your answer incorrectly added the accrual at the end of the year to the statement of profit or loss finance expense and deducted the accrual at the start of the year (£1,084 + £13,108 – £988 instead of £988 + £13,108 – £1,084).

Heading reference: 5 Interest paid (finance expense)

Type: multiple choice question

Title: Chapter 06 Question 86

86) At 1 November 2020, Venusia Limited had a liability for interest payable of £1,800. The statement of profit or loss for the year to 31 October 2021 presents a figure of £22,200 for interest payable (finance expense). At 31 October 2021, Venusia Limited had accrued interest payable of £2,000 owed by the company. Based on these figures, what cash paid will be disclosed by Venusia Limited in respect of interest payable in its statement of cash flows for the financial year ended 31 October 2021?

a. £18,400

Your answer incorrectly deducted both the accrual at the end of the year and the accrual at the start of the year from the statement of profit or loss finance expense figure (£22,200 – £1,800 – £2,000 instead of £22,200 + 1,800 – £2,000).

Heading reference: 5 Interest paid (finance expense)

b. £22,000

Heading reference: 5 Interest paid (finance expense)

c. £22,400

Your answer incorrectly added the accrual at the end of the year to the statement of profit or loss finance expense figure and deducted the accrual at the start of the year from the statement of profit or loss finance expense figure (£22,200 – £1,800 + £2,000 instead of £22,200 + 1,800 – £2,000).

Heading reference: 5 Interest paid (finance expense)

d. £26,000

Your answer incorrectly added both the accrual at the end of the year and the accrual at the start of the year to the statement of profit or loss finance expense figure (£22,200 + £1,800 + £2,000 instead of £22,200 + 1,800 – £2,000).

Heading reference: 5 Interest paid (finance expense)

Type: multiple choice question

Title: Chapter 06 Question 87

87) Sentinum Limited presents the following balances in its financial statements for the years ended 30 April 2021 and 30 April 2020:

Based on these numbers, what interest payable (finance expense) figure will be disclosed by Sentinum Limited in its statement of profit or loss for the financial year ended 30 April 2021?

a. £15,429

Your answer incorrectly used the cash paid to lenders for the year ended 30 April 2020 instead of the cash paid to lenders for the year ended 30 April 2021, adding this number to the liability brought forward instead of to the liability carried forward and deducting instead of adding the liability carried forward (£15,872 + £1,972 – £2,415 instead of £16,106 + £2.415 – £1,972).

Heading reference: 5 Interest paid (finance expense)

b. £15,663

Your answer incorrectly added the cash paid to lenders to the liability brought forward instead of to the liability carried forward and deducted instead of adding the liability carried forward (£16,106 + £1,972 – £2,415 instead of £16,106 + £2.415 – £1,972).

Heading reference: 5 Interest paid (finance expense)

c. £16,315

Your answer incorrectly used the cash paid to lenders for the year ended 30 April 2020 instead of the cash paid to lenders for the year ended 30 April 2021 (£15,872 + £2,415 – £1,972 instead of £16,106 + £2.415 – £1,972).

Heading reference: 5 Interest paid (finance expense)

d. £16,549

Heading reference: 5 Interest paid (finance expense)