CBSE Class 12 Accountancy Cash Flow Statement Set A

OBJECTIVE QUESTIONS

Question. Which of the following is not an investing cash flow?
(A) Purchase of marketable securities for Rs 25,000 cash
(B) Sales of land for Rs 28,000 cash
(C) Sale of 2,500 shares (held as investment) for Rs 15 each
(D) Purchase of equipment for Rs 500 cash
Answer. Option (A) is correct.

Question. Which of the following transactions will result into ‘Inflow of Cash’ ?
(A) Deposited Rs 10,000 into bank
(B) Withdrew cash from bank Rs 14,500
(C) Sale of machinery of the book value of Rs 74,000 at a loss of Rs 9,000
(D) Converted Rs 2,00,000 9% debentures into equity shares 
Answer. Option (C) is correct.

Question. Which of the following transactions will not result into flow of cash?
(A) Issue of equity shares of Rs 1,00,000
(B) Purchase of machinery of Rs 1,75,000
(C) Redemption of 9% debentures Rs 3,50,000
(D) Cash deposited into bank Rs 15,000
Answer. Option (D) is correct.

Question. Cash Flow Statement is based upon :
(A) Accrual basis of accounting
(B) Cash basis of accounting
(C) Accounting equatio
(D) None of the above 
Answer. Option (B) is correct

Question. Payment of income tax is classified under :
(A) Operating activity
(B) Financing activity
(C) Investing activity
(D) None of the above 
Answer. Option (A) is correct.

Question. Dividend received by other than financial enterprise is shown in cash flow statement under :
(A) Operating activity
(B) Financing activity
(C) Investing activity
(D) None of the above 
Answer. Option (C) is correct.

Question. Dividend received by financial enterprise is shown in cash flow statement under :
(A) Operating activity
(B) Financing activity
(C) Investing activity
(D) None of these 
Answer. Option (A) is correct.

Question. Pick the odd one out :
(A) Issue of shares in cash
(B) Issue of debentures in cash
(C) Proceeds from long-term loans
(D) Cash received as royalty 
Answer. Option (D) is correct.

Question. Pick the odd one out :
(A) Cash in hand
(B) Cash at bank
(C) Marketable Securities
(D) Non-current Investments 
Answer. Option (D) is correct.

Assertion and Reason Based MCQs

Directions: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R).
Mark the correct choice as:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(C) (A) is true, but (R) is false.
(D) (A) is false, but (R) is true.

Question. Assertion (A): Depreciation is added to net profit before tax.
Reason (R): Depreciation is a non-cash item which is an expense. 
Answer. Option (A) is correct.

Question. Assertion (A): Buy-back of equity shares comes under financing activities.
Reason (R): Financing activities are the activities which result in change in size and composition of owner’s capital and borrowing of the enterprise from other sources. 
Answer. Option (A) is correct.

Question. Assertion (A): Sale of fixed asset is shown under the investing activities.
Reason (R): Sale of fixed asset leads to inflow of cash. 
Answer. Option (B) is correct.

Question. Assertion (A): Proceeds from issue of shares and debentures are recorded in financing activity.
Reason (R): Issue of shares and debentures are the cash inflow or outflow made to finance the company. 
Answer. Option (A) is correct.

Case-based MCQs

I. Read the following information and answer the given questions:

Krishika an alumni of IIM Ahemdabad initiated her startup Krishika Ltd. in 2018.
The profits of Krishika Ltd. in the year 2019- 20 after all appropriations was Rs 31,25,000.
This profit was arrived after taking into consideration the following items:

Question. Operating profit before working capital changes will be Rs _______ .
(A) 52,17,500
(B) 64,67,500
(C) 39,67,500
(D) 39,69,500
Answer. Option (C) is correct.

Question. Cash from operating activities before tax will be Rs__________.
(A) 35,57,500
(B) 40,67,500
(C) 37,87,500
(D) 35,67,300
Answer. Option (A) is correct.

Question. Cash flow from Operating Activities will be Rs ___________.
(A) 39,95,000
(B) 31,20,000
(C) 40,67,500
(D) 31,00,000
Answer. Option (B) is correct

II. Read the following information and answer the given questions:

X Ltd. made a profit of Rs 5,00,000 after consideration of the following items :
                                                                           Rs
(i) Goodwill written off                                         5,000
(ii) Depreciation on Fixed Tangible Assets             50,000
(iii) Loss on Sale of Fixed Tangible                       20,000
Assets (Machinery)
(iv) Provision for Doubtful Debts                        10,000
(v) Gain on Sale of Fixed Tangible                      7,500
Assets (Land)
Additional information :

Question. How will goodwill written off be adjusted in the cash flow statement?
(A) Added to the Net Profit Before Tax
(B) Subtracted the Net Profit before Tax
(C) Not recorded in the Cash Flow
(D) None of these
Answer. Option (A) is correct.

Question. What will be the amount of Trade payables added to get the Cash flow from operations?
(A) Rs51,000
(B) Rs30,000
(C) Rs21,000
(D) Rs 31,000
Answer. Option (C) is correct.

Question. What amount of Trade Receivables will be subtracted from the Cash flow statement to get Cash flow from operations?
(A) Rs78,800
(B) Rs52,000
(C) Rs3,000
(D) Rs26,800
Answer. Option (D) is correct.

Question. Which of the following items will be adjusted to Net Profit before Tax?
(A) Trade Receivables
(B) Prepaid Expenses
(C) Loss on sale of Fixed Asset
(D) Expenses Payable
Answer. Option (C) is correct.

III. Read the following information and answer the questions that follow:

Following are the opening and closing balances of Jayesh Ltd.:

Additional information:
During the year :
(a) Depreciation charged on Plant and Machinery was Rs 36,000.
(b) A machine having a book value of Rs 20,000 was sold for Rs 16,000.
(c) Patents having a book value of Rs 80,000 were sold for Rs 1,10,000

Question.  What amount of sales proceeds of Plant and Machinery will be added/subtracted?
(A) Rs20,000 added
(B) Rs20,000 subtracted
(C) Rs16,000 added
(D) Rs16,000 subtracted
Answer. Option (C) is correct.

Question. What amount of machinery was purchased?
(A) Rs  70,000
(B) Rs 76,000
(C) Rs 3,20,000
(D) Rs 20,000
Answer. Option (B) is correct.

Question. What amount of patents will be added/subtracted to get the cash flow from investing activities?
(A) Rs1,50,000 added
(B) Rs1,50,000 subtracted
(C) Rs1,20,000 added
(D) Rs1,20,000 subtracted
Answer. Option (A) is correct.

Question. What is the cash flow from investing activities?
(A) Rs70,000
(B) Rs72,000
(C) Rs73,000
(D) Rs80,000
Answer. Option (A) is correct

Short Answer Type Questions-I

Question. From the following information, calculate the amount of cash flow from investing activities:
Acquired machinery for Rs 10,00,000, paying 10% immediately in cash and accepting a draft for the balance in favour of the vendor, payable after three months.
Answer. Cash outflow from investing activity Rs 1,00,000

Question. X Limited redeemed Rs 1,00,000, 9% debentures at 10% premium. What will be the amount of ‘Cash Flow from Financing Activities’ ?
Answer. Rs 1,10,000 

Question. Under which type of activity will you classify ‘Cash advances and loans made to third party’ while preparing Cash Flow Statement ?
Answer. Investing Activity

Question. While preparing cash flow statement, ‘Receipt of interest and divided’ will be classified under which type of activity in case of a nonfinancial enterprise?
Answer. Investing Activity

Question. ‘Loans and advances granted’ by a company will be considered as which type of activity while preparing Cash Flow Statement ?
Answer. Investing Activity

Question. Give any one example of an activity which is an investing activity for every type of enterprise.
Answer. Purchase of Goodwill

Question. ‘An enterprise may hold securities and loans for dealing or trading purpose in which case they are similar to inventory acquired specifically for resale’. Cash Flows from such activities will be classified under which type of activity while preparing Cash Flow Statement ? 
Answer. Operating Activities

Question. ‘Payment of bonus to the employees’ by an insurance company is which type of activity ?
Answer. Operating Activity

Question. Kaveri Ltd. a financing company obtained loans and advances of Rs 5,00,000 during the year @ 12% p.a. It will be included in which of the activities while preparing the cash flow
statement? 
Answer. Operating Activities

Question. ‘Koval Ltd.’ is a financing company. Under which activity will the amount of interest paid on a loan settled in the current year be shown ?
Answer. Operating Activity

Question. ‘G Ltd.’ is carrying on a paper manufacturing business. In the current year, it purchased machinery for Rs 30,00,000; it paid salaries of Rs 60,000 to its employees; it required funds for expansion and therefore, issued shares of Rs 20,00,000. It earned a profit of Rs 9,00,000 for the current year.
Find out cash flow from operating activities.
Answer. Rs 9,00,000

Question. If the net profits earned during the year is Rs 50,000 and the amount of debtors in the beginning and at the end of the year are Rs 10,000 and Rs 20,000 respectively, compute cash flow from operating activities.
Answer. Rs 40,000

Question. If the net profits made during the year are Rs 50,000 and the bills receivables have decreased by Rs 10,000 during the year. Compute cash flow from operating activities.
Answer. Rs 60,000

More QUestions

CASH FLOW STATEMENET

1. X Ltd. made a profit of Rs.4,75,000 after considering the following items:

Provision for tax made during the year    44,000
Preliminary expenses written off               5,000
Depreciation on fixed assets                   50,000
Loss on sale of machinery                      16,000
Provision for Doubtful debts                   10,000
Gain on sale of Land                               7,500

ADDITIONAL INFORMATION:

Please click the below link to access CBSE Class 12 Accountancy Cash Flow Statement Set A