Cash flows arising from each of the following activities of a financial institution may be reported on a net basis:
I cash receipts and payments for the acceptance and repayment of deposits with a fixed maturity date
II the placement of deposits with and withdrawal of deposits from other financial institutions
III cash advances and loans made to customers and the repayment of those advances and loans
IV cash receipts and payments for the acceptance and repayment of deposits with no fixed maturity date
A) I , II and IV;
B) II, III and IV;
C) I, III and IV;
D) I, II and III.

Question

Cash flows arising from each of the following activities of a financial institution may be reported on a net basis:
 I cash receipts and payments for the acceptance and repayment of deposits with a fixed maturity date
II the placement of deposits with and withdrawal of deposits from other financial institutions
III cash advances and loans made to customers and the repayment of those advances and loans
IV cash receipts and payments for the acceptance and repayment of deposits with no fixed maturity date
A) I , II and IV;
B) II, III and IV;
C) I, III and IV;
D) I, II and III.

Quizplus · Accepted Answer

Cash flows arising from the acceptance and repayment of deposits with a fixed maturity date, the placement and withdrawal of deposits with other financial institutions, and cash advances and loans made to customers and their repayments can be reported on a net basis according to accounting standards. This is because these activities are considered to be highly liquid and their turnover is quick, their amounts are large, and their maturities are short.

Cash Flows Arising from Each of the Following Activities of a Financial