CBSE Class 12 Accountancy Cash Flow Statement MCQs Set C

Question: A financial statement that shows the inflows and outflows of cash during a particular period of time is known as

a) Statement of cash flows

b) Income statement

c) Statement of retained earnings

d) Balance sheet

Answer: A

Question: A company who issues bonds or stocks in result raised funds which finally

a) Increases cash

b) Decreased cash

c) Increased liabilities

d) Increased equity

Answer: A

Question: In a statement of cash flows, a company investing in short-term financial investments and in fixed assets results in

a) Decreased cash

b) Increased cash

c) Increased liabilities

d) Increased equity

Answer: A

Question: Which of the following is not a cash outflow

a) Increase in creditors

b) Increase in Prepaid expenses

c) Increase in debtors

d) Increase in stock

Answer: A

Question: Which of the following is not a cash inflow

a) Decrease in creditors

b) Decrease in debtors

c) Issue of shares

d) Sale of fixed assets

Answer: A

Question: When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan element is classified under________.

a) Financing activities, investing activities

b) Operating activities, financing activities

c) Investing activities, operating activities

d) All of the options

Answer: A

Question: In case of other enterprises cash flow arising from interest paid should be classified as cash flow from ________ while dividends and interest received should be stated as cash flow from ____

a) Financing activities, investing activities

b) Operating activities, financing activities

c) Investing activities, operating activities

d) All of the options

Answer: A

Question: In the case of financial enterprises, the cash flow resulting from interest and dividend received and interest paid should be classified as cash flow from

a) Operating activities

b) Financing activities

c) Investing activities

d) All of the options

Answer: A

Question: Listed Enterprises need to prepare Cash Flow Statement only

a) Indirect method

b) Direct method

c) Average method

d) All of the options

Answer: A

Question: As per AS-3, Cash Flow Statement is mandatory for

a) Companies listed on a stock exchange and Companies with a turnover of more than Rs 50 crores

b) Companies listed on a stock exchange

c) Companies with a turnover of more than Rs 50 crores

d) None of the options

Answer: A

Question: For the calculation of cash flow from operating activities, payments and receipts shown in Profit & Loss account are converted into payments and receipts actually in cash by eliminating

a) Non-cash revenue from the revenue earned and Non-cash expenses from expenses incurred

b) Non-cash revenue from the revenue earned

c) Non-cash expenses from expenses incurred

d) None of the options

Answer: A

Question: Which of the following are cash flow from operating activities

a) Cash Receipts from customers and Cash Paid to Supplier and Employees

b) Cash Receipts from customers

c) Cash Paid to Supplier and Employees

d) None of the options

Answer: A

Question: _________ reconciles the opening cash balance with the closing cash balance of a given period on the basis of net decrease or increase in cash during that period.

a) Cash Flow Statement

b) Funds Flow Statement

c) Both

d) None of the options

Answer: A

Question: Cash flow statement is based upon _________ while Funds Flow Statement recognizes _______.

a) Cash basis of accounting, accrual basis of accounting

b) Accrual basis of accounting, cash basis of accounting

c) Both are based on cash basis of accounting

d) All of the options

Answer: A

Question: The objectives of Cash Flow Statement are

a) All of the options

b) Analysis of cash position

c) Short-term cash planning

d) Comparison of operating Performance

Answer: A

Question: Cash Flow Statement is also known as

a) Statement of Changes in Financial Position on Cash basis

b) Only inflow of cash

c) Only outlow of cash

d) None of the options

Answer: A

Question: As per Accounting Standard-3, Cash Flow is classified into

a) Operating activities, financing activities and investing activities

b) Operating activities and investing activities

c) Investing activities and financing activities

d) Operating activities and financing activities

Answer: A

Question: Redemption of preference Shares is concerned directly with

a) Financing Activities

b) Investing Activities

c) Operating Activities

d) All of the options

Answer: FA

Question: Sale of machinery is concerned with_________

a) Investing Activities

b) Financing Activities

c) Operating Activities

d) All of the options

Answer: A

Question: Proposed Dividend is classified under

a) Short term provisions

b) Reserves and Surplus

c) Non-current Liabilities

d) Long term provisions

Answer: A

Question: Financing activities brings changes in

a) Size and composition of owners equities and Borrowing of the enterprise

b) Size and composition of owners equities

c) Borrowing of the enterprise

d) None of the options

Answer: A

Question: ABC Ltd had investment of Rs 68,000 as on 31.3.2013 and investment of Rs 56,000 as on 31.3.2014. During the year ABC Ltd sold 40% of its investments being held in the beginning of period at a profit of Rs 16,800. Determine cash flow from investing activities.

a) Rs. 28,800

b) Rs. 59,200

c) Rs. 72,800

d) All of the options

Answer: A

Question: Which of the following statements represent example of cash flow from investing activities?

a) Cash advances and loans made to third parties

b) Cash advances and loans made by financial enterprises

c) Both

d) None of the options

Answer: A

Question: Acquisition and disposal of long term assets is included in

a) Cash flow from investing activities

b) Cash flow from financing activities

c) Cash flow from operating activities

d) All of the options

Answer: A

Question: Which of the following are cash flow from financing activities

a) Interest paid and Dividend paid

b) Interest paid

c) Dividend paid

d) None of the options

Answer: A

Question: Which of the following are cash flow from investing activities

a) All of the options

b) Interest received

c) Dividend received

d) Sale of fixed assets

Answer: A

Question: In indirect method, net cash flow from operating activities is calculated on the basis of

a) Net profit before tax

b) Net Profit after tax

c) Gross Profit after tax

d) Gross Loss after tax

Answer: A

Question: Given salary expenses Rs 40,000, Outstanding in the beginning of the year: Rs 5,000 and outstanding at the end of the year Rs 10,000. Cash outflow on salary will be

a) Rs. 35000

b) Rs. 45,000

c) Rs. 55,000

d) Rs. 15,000

Answer:A

Question: The amount of operating expenses which are actually been paid in cash are shown under

a) Cash outflow on expenses

b) Cash flow from sales

c) Cash outflow on purchases

d) All of the options

Answer: A

Question: While preparing Cash Flow Statement, non-cash items and non-operating items are not required to be adjusted under________

a) Direct method

b) Indirect method

c) Average method

d) All of the options

Answer: A

Question: Interest received by a finance company is classified under which kind of activity while preparing a Cash flow statement?

a) Cash Flow from Operating Activities

b) Cash Flow from Investing Activities

c) Cash Flow from Financing Activities

d) No Cash Flow

Answer: A

Question: A Mutual Fund Company receives a dividend of Rs.20 Lakhs on its investments in another company’s shares. Where will it appear in a Cash Flow Statement?

a) Cash Flow from Operating Activities

b) Cash Flow from Investing Activities

c) Cash Flow from Financing Activities

d) No Cash Flow

Answer: A

Question: Dividend paid by a finance company is classified under which kind of activity while preparing cash flow statement?

a) Cash Flow from Operating Activities

b) Cash Flow from Investing Activities

c) Cash Flow from Financing Activities

d) No Cash Flow

Answer: C

Question: Dividend received by other than financial enterprise is shown in Cash Flow Statement under

a) Operating Activities.

b) Investing Activities.

c) Financing Activities.

d) General Activities.

Answer: B

Question: Dividend received by financial enterprise is shown in Cash Flow Statement under

a) Operating Activities.

b) Investing Activities.

c) Financing Activities.

d) General Activities.

Answer: A

Question: Payment of income Tax is shown as

a) Operating Activities.

b) investing Activities.

c) Financing Activities.

d) General Activities.

Answer: A

Question: While calculating operating profit which will be added to net profit

a) Profit on Sale of Asset

b) Increase in General Reserves

c) Interest received

d) Refund of Tax

Answer: B

Question: While calculating cash flow from operating activities which will be deducted:

a) Decrease in Prepaid Expenses

b) Increase in Trade Payables

c) Increase in Trade Receivables

d) Decrease in Trade Receivables

Answer: C

Question: While calculating cash flow from operating activities which will be added :

a) Increase in Inventory

b) Increase in Creditors

c) Decrease in Bills Payable

d) Increase in Trade Receivables

Answer: B

Question: Amongst the following payment of bonus to the employees by an insurance company is which type of activity?

a) Operating Activity

b) investing Activities

c) Financing Activity

d) Both operating and Financing Activity

Answer: A

Question: Which of the following transactions will result into ‘Flow 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: C

Question: If the amount of goodwill is Rs.40,000 at the beginning of a year and Rs.48,000 at the end of that year then while preparing cash flow statement its effect on cash flow will be :

a) Cash used (Payment) in Investing Activities Rs. 8,000

b) Cash received from operating activities Rs. 8,000

c) Cash used (Payment) from Operating Activities Rs. 8,000

d) Cash used (Payment) from Financial Activities Rs.8,000

Answer: A

Question: How will you deal increase in the balance of ‘Securities Premium Reserve’ while preparing a Cash Flow Statement?

a) Cash Flow from Operating Activities

b) Cash Flow from Investing Activities

c) Cash Flow from Financing Activities

d) Cash Equivalent

Answer: C

Question: Fine Garments Ltd. is engaged in the export of readymade garments. The company purchased a machinery of Rs. 10,00,000 for the use in packaging of such garments. Cash flow due to the purchase of machinery will be cash flow from :

a) Cash Flow from Operating Activities

b) Cash Flow from Investing Activities

c) Cash Flow from Financing Activities

d) Cash Equivalent

Answer: B