- 30 Marks
Question
The following information relates to financial statements included in the annual report of Bello Professional Nigeria Limited.
Required
a. Prepare a statement of cash flow for Bello Professional Nigeria Limited for the year ended March 31, 2015, in accordance with IAS 7 using the indirect method. (18 Marks)
b. One of the directors at the annual general meeting suggested that the direct method of preparing cash flows is more useful. Comment on this view, providing your opinion. (7 Marks)
c. IAS 7 allows different classifications in cash flow statements. Explain the classification options for the following items:
- i. Interest paid
- ii. Dividends received
(5 Marks)
Answer
b. Director’s View on Direct Method (Commentary):
Advantages of Direct Method: Shows detailed receipts and payments, enhances user understanding, and facilitates cash flow forecasting.
Opinion: I agree with the director’s view that the direct method offers detailed insights, though both methods are permitted under IAS 7.
c. Classification of Interest Paid and Dividends Received (IAS 7 Options):
Interest Paid: Classified as either operating or financing cash flow.
Dividends Received: Classified as either operating or investing cash flow.
- Topic: Statement of Cash Flows (IAS 7)
- Series: MAY 2017
- Uploader: Theophilus