ExpertMedium2 marksMultiple Choice
ACCA · Question 30 · Preparing Basic Financial Statements
Section A
When preparing a Statement of Cash Flows in accordance with IAS 7, which TWO of the following items would be classified under 'Cash flows from investing activities'?
Section A
When preparing a Statement of Cash Flows in accordance with IAS 7, which TWO of the following items would be classified under 'Cash flows from investing activities'?
Answer options:
A.
Proceeds from the issue of share capital.
B.
Proceeds from the sale of equipment.
C.
Dividends paid to shareholders.
D.
Dividends received from an associate company.
How to approach this question
Recall the three categories: Operating (day-to-day), Investing (non-current assets and returns on investments), Financing (equity and long-term borrowings).
Full Answer
Investing activities include the cash flows arising from the purchase and sale of non-current assets (like equipment) and cash receipts from investments, such as dividends received. Issuing shares and paying dividends are financing activities.
Common mistakes
Confusing dividends paid (financing) with dividends received (investing/operating).
Practice the full ACCA FA — Financial Accounting Practice Exam 5
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