I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART F: PREPARING BASIC FINANCIAL STATEMENTS 

 

380

 

1 

Assets and liabilities should be adjusted for events after the reporting period when these provide 

additional evidence for estimates existing at the reporting date. 

2 

B 

A statement of the nature of the event and the fact that a financial estimate of the event cannot be 

made 

3 A 1 

only 

4 C 3 

only 

5 

False. It is an adjusting event.  

 

 

 

 

 

 

 

 

 

Now try ... 

 

Attempt the questions below from the Practice Question Bank 

 

Qs 81 – 83 

 

 

 

 

 

 

 

ANSWERS TO QUICK QUIZ 

BPP Tutor Toolkit Copy

---

 

 

381

 

C H A P T E R 

 

TOPIC LIST 

SYLLABUS 

REFERENCE 

1 IAS 

7 

Statement of cash flows

 

F5(a)–(h)

2  Preparing a statement of cash flows 

F5(g)

 

 

 

 

 

 

 

Statements of cash 

flows

In the long run, a profit will result in an increase in the company's 

cash balance. In the short run, the making of a profit will not 

necessarily result in an increased cash balance. The observation 

leads us to two questions. The first relates to the importance of the 

distinction between cash and profit. The second is concerned with 

the usefulness of the information provided by the statement of 

financial position and statement of profit or loss in the problem of 

deciding whether the company has, or will be able to generate, 

sufficient cash to finance its operations. 

The importance of the distinction between cash and profit and the 

lack of information about actual cash flows in the statement of 

profit or loss has resulted in the development of statements of cash 

flows. 

This chapter adopts a systematic approach to the preparation of 

statements of cash flows in examinations. You should learn this 

method and you will then be equipped for any problems in the 

exam itself. 

BPP Tutor Toolkit Copy

---