Вопрос
QUESTION 3 a) Explain each of the three headings in the Statements of Cash Flows as required by International Accounting Standards (IAS) 7. b) Explain with relevant examples, the information to be included under each of the headings stated above, in an IAS 7- based Statement of Cash Flows and explain further the usefulness of each heading.
Решения
4.5
(251 Голоса)
Руслан
профессионал · Репетитор 6 лет
Ответ
a) The three headings in the Statement of Cash Flows as required by International Accounting Standards (IAS) 7 are:1. Operating Activities: This heading includes the cash flows that arise from the primary revenue-generating activities of the entity. It reflects the cash generated from the entity's main operations, such as the sale of goods and services, and the cash used in the day-to-day operations of the business.2. Investing Activities: This heading includes the cash flows that arise from the acquisition and disposal of long-term assets, such as property, plant, equipment, and investments. It reflects the cash used or generated from the purchase or sale of these assets, which are expected to provide future economic benefits.3. Financing Activities: This heading includes the cash flows that arise from changes in the size and composition of the entity's equity capital and borrowings. It reflects the cash used or generated from the issuance or repayment of equity instruments, such as shares, and the issuance or repayment of debt instruments, such as loans and bonds.b) The information to be included under each of the headings in an IAS 7-based Statement of Cash Flows is as follows:1. Operating Activities: - Cash received from customers: This includes cash received from the sale of goods and services. - Cash paid to suppliers and employees: This includes cash paid for the purchase of inventory, raw materials, and other supplies, as well as cash paid to employees for wages and salaries. - Interest and dividends received and paid: This includes cash received from interest and dividends on investments, as well as cash paid for interest on borrowings. - Other operating cash receipts and payments: This includes any other cash receipts and payments related to the entity's primary revenue-generating activities. The usefulness of the Operating Activities section is that it provides information about the cash generated from the entity's main operations, which is essential for assessing the entity's ability to generate sufficient cash to meet its operating expenses and to pay its debts.2. Investing Activities: - Purchase and sale of property, plant, and equipment: This includes the cash used or generated from the acquisition or disposal of long-term assets. - Purchase and sale of investments: This includes the cash used or generated from the acquisition or disposal of investments, such as stocks and bonds. - Purchase and sale of business segments: This includes the cash used or generated from the acquisition or disposal of entire business segments or subsidiaries. - Other investing activities: This includes any other cash receipts and payments related to the acquisition or disposal of long-term assets. The usefulness of the Investing Activities section is that it provides information about the entity's investment activities, which can help users assess the entity's long-term growth prospects and the risks associated with its investment decisions.3. Financing Activities: - Issuance and repayment of equity instruments: This includes the cash received from the issuance of shares or other equity instruments, as well as the cash paid for the repurchase or redemption of equity instruments. - Issuance and repayment of debt instruments: This includes the cash received from the issuance of loans, bonds, or other debt instruments, as well as the cash paid for the repayment of these instruments. - Dividends paid: This includes the cash paid to shareholders in the form of dividends. - Other financing activities: This includes any other cash receipts and payments related to changes in the size and composition of the entity's equity capital and borrowings. The usefulness of the Financing Activities section is that it provides information about the entity's financing activities, which can help users assess the entity's ability to access capital and the terms of its financing, as well as the potential risks associated with its financing decisions.