Answer 8. Cash flows arising from trading securities area. Classified as operating activitiesb. Classified as investing activitiesc. Classified as financing activitiesd. Not reported in the cash flow statement9. Noncash investing and financing activities area. Reported only if the direct method is used.b. Reported only if the indirect method is used.c. Disclosed in a note or separate schedule.d. Not reported.10. Interest payments to lenders are classified asa. Operating activitiesb. Borrowing activitiesc. Lending activitiesd. Financing activities11. Which of the fllowing is not considered as a cash equivalent?a. A three-year treasury note maturing on January 31 of next year purchased by theentityon December 1 of the current year.b. A three-year treasury note maturing on January 31, of next year purchased by theentityon December 1 of the current yearc. A 90-day Treasury billd. A 60-day money market placement A. Multiple Choice: Theory 11. The primary purpose of a statement of cash flows is to provide relevant information abouta. Difference between net income and associated cash receipts and disbursement.b. An entity's ability to generate positive net cash flows.c. The cash receipts and cash disbursements of an entity during a periodd. An entity's ability to meet cash operating needs2. Cash equivalents are;a. Treasury bills and money market funds.b. Investments with original maturities of three months or less.c. Readily convertible to known amount of cash.d. All of these are features of cash equivalents.3. Cash advances and loans made by a financial institution are usually classified asa. Operating activitiesb. Investing activitiesc. Financing activitiesd. Compound of cash and cash equivalents4. Under IFRS, an entity can report interest paid on bank loan in the statement of cashflowsa. operating activitiesb.Either in operating activities or financing activitiesIn financing activitiesd. In investing activities or financing activities5. Cash flows relating to asset held for rental to others are classified asC.a. Operatingb. Investingc. Financingd. Either operating or investing6. Cash receipts from royalties and commissions area. Cash outflows for operating activitiesb. Cash inflows from operating activities130C.Cash inflows from investing activitiesd. Cash outflows for financing activities.7. All can be classified as cash and cash equivalents, excepta. Time deposit due in 60 daysb. Treasury bills due for repayment in 90 daysc. Equity investmentsd. Bank overdraft

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8. Cash flows arising from trading securities are a. Classified as operating activities b. Classified as investing activities c. Classified as financing activities d. Not reported in the cash flow statement