1. During 2013 management entity acquired ten year fixed rate (3% annually) government bonds 60 days before maturity for 3,000 euro. The bonds are AAA credit rated and were acquired in an active market with cash. How should this transaction be classified in the statement of cash flows?

a. operating cash outflow

b. Investing cash outflow

c. Financing cash outflow

d. None of the above

Please also explain reasoning.

2. Which of the following could be classified as an operating cash flow in the statement of cash flows?

a. Repayment of borrowings

b. Proceeds from the sale of intangible assets

c. Payment of dividends

d. impairment losses

e. both c and d

f. None of the above

Please also explain reasoning.

3. Dividends paid are to be classified as what type of cash flow?

a. operating cash flow

b. financing cash flow

c. both a and b

d. none of the above

Please also explain reasoning.

4. Income taxed are classified under which section of the statement of cash flows under IFRS?

a. Operating activities

b. investing activities

c. financing activities

d. all of the above

Case:

Access the most recent annual report available on each company's public website for two automobile manufacturers, Daimler AG (www.Daimler.com) and Fiat S.p.A. (www.fiatspa.com). (Note: Most companies provide access to their financial data through an "investor relations" link). After reviewing the annual report for each company, respond to the following questions:

1. Consider the statement of cash flows of each company. What were three major cash outflows for each company in each of the last two years? How did each company finance these cash outflows?

2. Consider the statement of changes in equity and the statement of cash flows for each company. Determine if each company paid dividends to its shareholders. Compare each company's dividend payments to its profit for the year. What percentage of its profit did each company pay to its shareholders in each of the last two years?