True/False
1. Under IFRS, companies are not required to prepare a statement of cash flows if the transactions are
reported elsewhere in the financial statements.
2. A statement of cash flows prepared according to IFRS requirements must be prepared using the direct
method for operating activities.
3. Under IFRS, noncash investing and financing activities are excluded from the statement of cash flows.
4. In certain circumstances under IFRS, bank overdrafts are considered part of cash and cash equivalents.
5. The definition of cash equivalents used in IFRS is similar to that used in GAAP.
Multiple Choice Questions
6. Which of the following is false with regard to IFRS and the statement of cash flows?
a. The IASB is strongly in favor of requiring use of the direct method for operating activities.
b. In certain circumstances under IFRS, bank overdrafts are considered part of cash and cash
equivalents.
c. IFRS requires that noncash investing and financing activities be excluded from the statement of cash
flows.
d. All of these statements are false with regard to IFRS and the statement of cash flows.
7. Ocean Company follows IFRS for its external financial reporting. Which of the following methods of
reporting are acceptable under IFRS for the items shown?
Interest paid Dividends paid
a. Operating Investing
b. Investing Financing
c. Financing Investing
d. Operating Financing
8. Ocean Company follows IFRS for its external financial reporting. Which of the following methods of
reporting are acceptable under IFRS for the items shown?
Interest received Dividends received
a. Operating Investing
b. Investing Financing
c. Financing Investing
d. Operating Financing
9. Wave, Inc. follows IFRS for its external financial reporting. The statement of cash flows reports changes in
cash and cash equivalents. Which of the following is not considered cash or a cash equivalent under
IFRS?
a. Coin.
b. Bank overdrafts.
c. Commercial paper.
d. Accounts receivable.
10. Surf Company follows IFRS for its external financial reporting. The following amounts were available at
December 31, 2021:
Interest paid $22,000
Dividends paid 16,000
Taxes paid 37,000
Under IFRS, what is the maximum amount that could be reported for cash used by operating activities for
Surf Company for the year ended December 31, 2021?
a. $59,000
b. $38,000
c. $53,000
d. $75,000
11. Surf Company follows IFRS for its external financial reporting. The following amounts were available at
December 31, 2021:
Interest received $25,000
Dividends received 16,000
Under IFRS, what is the maximum amount that could be reported for cash provided by operating activities
for Surf Company for the year ended December 31, 2021?
a. $-0-
b. $25,000
c. $16,000
d. $41,000
12. Surf Company follows IFRS for its external financial reporting. The following amounts were available at
December 31, 2021:
Interest paid $25,000
Dividends paid 16,000
Taxes paid on operations 37,000
Under IFRS, what is the maximum amount that could be reported for cash used by financing activities for
Surf Company for the year ended December 31, 2021?
a. $62,000
b. $41,000
c. $53,000
d. $78,000
13. In the "On the Horizon" feature in the text, which of the following is discussed regarding convergence of
GAAP with IFRS?
a. Noncash investing and financing activities will be disclosed only in the notes.
b. Bank overdrafts will be classified as part of financing activities.
c. The statement of cash flows will present only changes in cash and will exclude changes in cash
equivalents.
d. All of these choices are in "On the Horizon" regarding converging GAAP and IFRS.
14. Which of the following is true regarding the statement of cash flows and IFRS?
a. Cash and cash equivalents are defined differently under IFRS than under GAAP.
b. Companies preparing a complete set of financial statements under IFRS may exclude the statement of
cash flows if the cash flow activity is reported in the notes to the financial statements.
c. Under IFRS most companies choose to use the direct method of reporting cash flows from operating
activities.
d. Under IFRS noncash investing and financing activities are excluded from the statement of cash flows