Question 4- Multiple Choice Questions (10 Marks) captal leters (. B C Please wri

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Question 4- Multiple Choice Questions (10 Marks) captal leters (. B C Please write your answer in capital letters (A, B, C or D) in the table below Question Answer 10 1. Which of the following is incorrect about the statement of cash flows? a. It is the third basic financial statement b. It provides information about cash receipts and cash payments of an entity during a period. It reconciles the ending cash account balance to the balance as per the bank statement. c. d. It provides information about the operating, investing and financing activities of the business. 2. Which of the following is not a non-cash activity? a. Issue of shares to purchase assets b. Issue of debt to purchase assets. c. Payment of cash dividends. d. Exchange of property, plant and equipment

Explanation / Answer

The below are the answers with explanation 1 a It is the third basic financial statement This is true as first statement is the income statement and second statement is balance sheet b It provides information about cash receipts and cash payments of an entity during a period This is also true as cash flow provides details of cash received and paid in opearting, investing and financing activity c It reconciles the ending cash account balance to the balance as per the bank statement This is false as cash flow statement provides reconciliation of beginning balance cash to the end balance cash d It provides information about the operating, investing and financing activities of the business This is also true as cash flow provides details of cash received and paid in opearting, investing and financing activity Hence, the correct answer is A. It reconciles the ending cash account balance to the balance as per the bank statement 2 The correct answer is C. Payment of cash dividends where cash is involve for all the remaining activity there is no cash involvement 3 The correct answer is A. Payment of wages as the remaining are cash flow from financing activity 4 The correct answer is C. Receipt of cash from the sale of equipment. The remaining activities are financing activity and operating activity 5 The correct answer is D. Cash dividend paid is part of financing activity 6 The correct answer is B. Issue od debt for cash. The remaining activity are onvesting activity 7 Cash Receipts = Opening receivables + Sales - Closing Receivables 44000+129000-42000 131000 $131,000 The correct answer is C 8 The correct answer is D. The others are used for indirect method 9 Profit $132,000 Increase in accounts payable 10000 Decrease in inventory 6000 Increase in accounts receivable -12000 Net cash provided by operation $136,000 The correct answer is D 10 The correct answer is B. The other are added back to profit

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