CBSE Class 12 Accountancy Cash Flow Statement MCQs Set 05

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. Which of the following is not a source of finance
(a) Fixed Assets
(b) Debentures
(c) Bank Overdraft
(d) Bank Loan

Answer : A

Question. Interest on long term borrowings is an Expense relating to financial activities and shown as ______ of cash.
(a) Outflow
(b) Inflow
(c) Income
(d) All of the options

Answer : A

Question. What are the objectives of preparing cash flow statement
(a) All of the options
(b) To determine the liquidity position of the organisation
(c) To know about the requirement of cash in future
(d) To ascertain the gross inflows and outflows of cash

Answer : A

Question. When Company repurchases shares, pays dividends or pays off debt, it records a
(a) Cash inflow
(b) Not related to cash
(c) Cash outflow
(d) All of the options

Answer : C

Question. Cash flows from investing activities are those
(a) All of the options
(b) Property
(c) Plant
(d) Intangible assets.

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. Is payment for purchase of fixed assets will be classified as operating activity for both finance and non finance company
(a) No its investing activities
(b) No Its financing activities
(c) Not to be recorded
(d) All of the options

Answer : A

Question. A Ltd., engaged in the business of retailing of two wheelers, invested Rs. 50,00,000 in the shares of a manufacturing company. Dividend received on this investment will be :
(a) Cash Flow from Operating Activities
(b) Cash Flow from Investing Activities
(c) Cash Flow from Financing Activities
(d) Cash Equivalent

Answer : B

Question. Which of the following transactions would result inflow of cash:
(a) Cash withdrawn from Bank for office use.
(b) Purchase of machinery worth Rs 2,00,000 and issued shares in consideration thereof.
(c) Sale of furniture for Rs 3,000 to Mr. Mohan.
(d) Cash received from Debtors Rs 6,000

Answer : D

Question. Which of the following transactions would not create a cash flow ?
(a) A company purchased some of its own stock from a stockholder
(b) Amortization of a patent
(c) Payment of a Cash Dividend
(d) Sale of equipment at book value

Answer : B

Question. From the following particulars, what will be the amount of provision for tax made during the year?
Provision for Taxation
31.3.2011 50,000
31.3.2012 40,000
The Company paid taxes Rs 45,000 for the year 2011-2012.
(a) Rs 45,000
(b) Rs 35,000
(c) Rs 40,000
(d) Rs 50,000

Answer : B

Question. A company receives a dividend of X2 Lakhs on its investment in other company’s shares. In case of a Finance Company, it will be classified under which kind of activity?
(a) Cash Flow from Operating Activities
b) Cash Flow from Investing Activities
(c) Cash Flow from Financing Activities
(d) No Cash Flow

Answer : B

Question. GSC Ltd. purchased machinery of Rs. 10,00,000 issuing a cheque of Rs. 2,50,000 and 10% Debentures of Rs. 7,50,000. ln the Cash Flow Statement, the transaction will be shown as
(a) Outflow under Investing Activity Rs. 10,00,000, inflow under Financing Activity as Receipt for Debentures Rs. 7,50,000.
(b) Outflow under investing Activity Rs. 2,50,000.
(c) Inflow of Rs. 7,50,000 as Financing Activity.
(d) None of the options

Answer : B

Question. The statement of cash flows is designed with the purpose of helping users to assess each of the following, except
(a) The profitability of the entity
(b) The major sources of cash receipts during the period
(c) The reasons why net cash flows from operating activities differ from net income
(d) The ability of a entity to remain liquid

Answer : A

Question. Cash flows from financing activities are those that take place between
(a) Firm and its investors
(b) Sundry Creditors and Sundry Debtors
(c) Net profit & loss
(d) All of the options

Answer : A

Question. Expenses paid in advance at the end of the year are______________the profit made during the year
(a) Deducted from
(b) Added to
(c) Divided to
(d) All of the options

Answer : A

Question. The primary objective of cash flow statement is to provide useful information about
(a) Net Profit
(b) Cash Flow
(c) Net Loss
(d) All of the options

Answer : B

Question. From the following information find out the inflow of cash
Office Equipment `
31st March, 2014 60,000
31st March, 2013 1,00,000
Additional Information:
Depreciation for the year 2013-14 is Rs 7,000, Purchase of office Equipment during the year Rs 10,000 Part of Office Equipment sold at a profit of Rs 6,000
(a) Rs 48,000
(b) Rs 49,000
(c) Rs 44,000
(d) Rs 33,000

Answer : B

Question. Gain on sale of tangible non current asset is an
(a) Operating activity
(b) Investing activity
(c) Financing activity
(d) Cash and Cash Equivalents

Answer : A

Question. From the following information find out the cash flow from financing activities.
Liabilities
Proposed Dividend
31st March 2013 20,000
31st March 2014 15,000
Additional Information: Equity Share Capital raised 3,00,000 10% Debentures Redeemed 1,00,000 Preference Share capital Redeemed 50,000. Interim Dividend paid during the year 20,000
(a) Rs 1,25,000
(b) Rs 1,00,000
(c) Rs1,50,000
(d) Rs 1,30,000

Answer : B

Question. Under Cash Flow from Operating Activities incorporates are
(a) All of the options
(b) Cash received from customers
(c) Paid to suppliers
(d) Paid for operating costs

Answer : A

Question. The cash flow statement begins with the
(a) Cash Flow from Financing Activities
(b) Cash Flow from Operating Activities
(c) Cash Flow from Investing Activities
(d) None of these

Answer : B

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 then the cash flow from operating activities will be equal to Rs.
(a) Rs. 40,000
(b) Rs. 70,000
(c) Rs. 60,000
(d) Rs. 50000

Answer : C

Question. A decrease in outstanding expense would result in
(a) Decrease in cash balance
(b) Increase in cash balance
(c) Unaltered
(d) Would change the current liabilities.

Answer : D

Question. Expenses paid in advance at the end of the year are i…….in ……ii activities while preparing cash flow statement
(a) Added,Operating
(b) Subtracted,Operating
(c) Added,Investing
(d) Subtracted,Investing

Answer : A

Question. Which of the following shall be considered as an outflow of cash in cash flow statement.
(a) Decrease in Public Deposits
(b) Issue of share capital
(c) Increase in accounts payable
(d) Decrease in accounts receivables.

Answer : A

Question. Total Sales Rs, 500000, Credit Sales Rs. 225000, Total Purchase Rs. 248000, Credit Purchase Rs. 108000, Cash Operating Exp Rs. 40000, Cash From Operation will be
(a) Rs. 95000
(b) Rs. 90000
(c) Rs. 60000
(d) RS. 70000

Answer : A

Question. Opening Stock Rs. 7000, Closing stock Rs. 10000, Cash Purchase Rs. 82000. Sales Rs. 125000 including credit sales Rs. 18000, Cash generated from operations Equal
(a) Rs. 42000
(b) Rs. 28000
(c) Rs. 30000
(d) Rs. 22000

Answer : D

Question. When the company issues new shares, it records a
(a) Cash inflow
(b) Cash outflow
(c) Not related to cash
(d) All of the options

Answer : A

Question. How many methods for the preparation of cash flow statement
(a) 3
(b) 4
(c) 2
(d) 5

Answer : C

Question. A cash flow statement is also prepared to determine the
(a) Liquidity position of the organisation
(b) Debt position of the organisation
(c) Net Profit position of the organisation
(d) Net Profit position of the organisation

Answer : A

Question. The most important objective of cash flow statement is that helps to ascertain the and outflows of cash and from
(a) All of the options
(b) Gross inflows
(c) Outflows of cash
(d) Cash equivalents

Answer : A

State True of False

Question. Buy Back of shares is an extraordinary item for Financing activity.
Answer : TRUE

Question. Issue of Bonus shares is shown as a financing activity.
Answer : FALSE

Question. Gratuity paid to a retiring employee is an Operating activity.
Answer : TRUE

Question. Shares issued to promoters in consideration of their services are shown as a financing activity.
Answer : FALSE

Question. Operating activities are principal revenue producing activities of an enterprise and those activities that are not investing or financing activities.
Answer : TRUE