Reference no: EM133038236

Questions -

Q1. All of the following are limitations of the statement of cash flows, except:

A. financial ratios based on cash flow data are better at predicting financial distress for companies than other ratios that rely solely on accrual accounting balances

B. it provides past cash flow data, which may not be a good predictor of future cash flows

C. the direct method of determining cash flows from operating activities does not provide industry comparison

D. non-cash transactions and events while relevant to the financial affairs of the entity are excluded from the statement of cash flows.

Q2. During the financial year, Seru Limited has a cost of sales amounting to $305,000. Opening balances were: inventory $42,000; accounts payable $32,000. Closing balances were: inventory $47,000; accounts payable $24,000. A discount of $2,000 for prompt payment was received. The amount of cash paid for goods purchased during the year was:

A. $320,000

B. $300,000

C. $316,000

D. $306,000

Q3. Bale Limited acquired 100% of the shares in Tima Limited on a cum div. basis for $200 000. At acquisition date, the subsidiary had a declared dividend of $10 000. The pre-acquisition elimination entry must include the following line:

A. DR Shares in subsidiary $190 000

B. CR Shares in subsidiary $200 000

C. CR Shares in subsidiary $190 000

D. CR Shares in subsidiary $10 000

Q4. A group of entities comprised of Ke Limited (parent entity), Geo Limited (subsidiary entity) and Em Limited (subsidiary entity) have the following inventory balances. - Ke Limited $41 000 - Geo Limited $14 000 - Em Limited $12 000 Which of the following amounts is shown as the consolidated inventory balance in the consolidated financial statements?

A. $12 000

B. $14 000

C. $26 000

D. $67 000

Q5. According to IFRS 10 Consolidated Financial Statements, which of the following factors indicate the existence of control?

I. Possessing existing rights that give the current ability to direct the relevant activities.

II. Shared power in the governance of financial and operating policies of another entity so as to obtain benefits.

III. The power to have significant influence over the operating policies of an entity so as to obtain benefits.

IV. Ownership of more than 50% of the voting rights in the subsidiary.

A. I, II and III only

B. I and IV only

C. II and IV only

D. IV only