Chapter 4 Flashcards
It is the spot exchange rate at the end of the reporting period
Closing rate
It is the difference resulting from translating a give number of units of one currency into another currency at different exchange rate
Exchange difference
It is the ratio of exchange between two currencies
Exchange rate
It is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date
Fair value
It is a currency other than the functional currency of entity
Foreign currency
It is an entity that is a subsidiary, associate, joint agreement or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity
Foreign operation
It is the currency of the primary economic environment in which the entity operates
Functional currency
It is the currency in which the financial statements are presented
Presentation currency
These are units of currency held and assets and liabilities to be received or paid in a fixed determinable number of units of currency
Monetary items
It is exchange rate for immediate delivery
Spot exchange rate
Based on IAS 7, Cash comprises of
Cash on hand and demand deposits
These are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk if changes in value
Cash equivalents
These are inflows and outflows of cash and cash equivalents
Cash flows
These are the principal revenue producing activities of entity
Operating activities
These are the activities involving acquisition and disposal of long term assets and other investment not included in cash equivalents
Investing activities
These activities that result in changes in the size and composition of the contributed equity and borrowings of the entity
Financing activities
How are cashflows be classified in the statement of cashflows
Operating, investing and financing activities
Give at least three examples of cash flows from operating activities
Cash receipts from the sale of goods and rendering of services
Cash receipts from royalties, fees and commission ps and other revenues
Cash payments to and on behalf of employees
Cash payments or refunds of income taxes unless they can be specifically identified with other activities
Cash receipts and payments from contracts held for dealing or trading purposes
Give at least three examples of cash flows from investing activities
Cash payments to acquire long term assets
Cash payments from sales of long term assets
Cash payments to acquire equity or debt instruments of other entities and interest in joint ventures
Cash receipts from sale of equity or debt instruments of other entities and interest in joint ventures
Cash advances and loans to other parties
Cash receipts from the repayments of advances and loans to other parties
Cash payments for future contracts, forward contracts, option contracts and swap contracts
Cash receipts from future contracts, forward contracts, option contracts and swap contracts
Give at least three examples of cash flows from financing activities
Cash proceeds from issuing debentures, loans, notes, bonds, mortgages and other short term or long term borrowings
Cash repayments of amounts borrowed
Cash payments by lessee for the reduction of the outstanding liability relating to a lease
What are the two methods use to report cash flows from operating activities
Direct method and indirect method
What is the normal and alternative classification of interest paid in the statement of cash flow
Operating; Financing respectively
What is the normal and alternative classification of dividends receive in the statement of cash flow
Operating; Investing respectively
What is the normal and alternative classification of dividends paid in the statement of cash flow
Financing; Operating respectively
