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CA Final · Financial Reporting · Ind AS 7 Statement of Cash Flows

A finance executive compares Ind AS 7 with IAS 7 for a listed non-financial company. Which statement correctly describes the classification of cash flows under Ind AS 7?

Under Ind AS 7 there is no option: interest paid and dividend paid are financing items, while interest and dividends received are investing items. The choices of operating classification found in IAS 7 for non-financial entities have been removed.

  1. AInterest paid may be shown as operating or financing, at the entity's option
  2. BDividend paid may be shown as operating or financing, at the entity's option
  3. CInterest and dividends received may be shown as operating or investing, at the entity's option
  4. DInterest paid is financing, interest and dividends received are investing, and dividend paid is financing, with no optionCorrect

Explanation

Ind AS 7 removes the IAS 7 options for non-financial entities. Interest paid is classified as financing, interest and dividends received as investing, and dividend paid as financing. The other statements describe choices that exist only under IAS 7.

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