Question

1#. Maple Co is a public limited company which operates in the United Kingdom. The majority of its business is carried out in Europe and its revenue is in Euros. Most of its raw materials are purchased from Hong Kong where the currency is the Hong Kong dollar.

The company invoices its customers in Euros and insists on payment in Euros. Maple Co also has a subsidiary in Hong Kong.

What currency should the financial statements be presented in?

Euros

UK Sterling

Hong Kong dollars

Any currency chosen by Maple Co

2# Which one of the following statements is correct according to IAS 7 Statement of Cash Flows?

Preparing a statement of cash flows using the direct method gives a different cash flow from operating activities to that using the indirect method

Cash flows from interest and dividends should be disclosed separately

A statement of cash flows may be included as a primary statement in an entity’s financial statements, or in the notes to the financial statements

Financing activities include the acquisition and disposal of long-term assets and other investments not included in cash equivalents

Answer 1

Ques 1 The correct answer is A "Euros"
As the majority of company's operations are carried out in UK, the financial statements should be presented in Euros only. Also, it invoices its customers in Euros only, which is another indicator of the default currency used by the company.

Ques 2 The correct answer is B "Cash flows from interest and dividends should be disclosed separately"

Cash flows from interest and dividends, received and paid , both shall be disclosed separately. The classification should be followed consistently over the years as operating, financing or investing