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Quiz - Cash Flow

The document contains multiple choice questions about concepts related to cash flow statements. It covers topics such as the classification of cash flows into operating, investing and financing activities; definitions and objectives of the cash flow statement; and calculations related to determining cash flows from operations, investments and financing on the cash flow statement. The questions test understanding of accounting standards and how to properly classify transactions and account for non-cash items when preparing the statement.

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Afrose Khan
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412 views7 pages

Quiz - Cash Flow

The document contains multiple choice questions about concepts related to cash flow statements. It covers topics such as the classification of cash flows into operating, investing and financing activities; definitions and objectives of the cash flow statement; and calculations related to determining cash flows from operations, investments and financing on the cash flow statement. The questions test understanding of accounting standards and how to properly classify transactions and account for non-cash items when preparing the statement.

Uploaded by

Afrose Khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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23822.aspx

Concepts of Cash Flow Statement - MCQs with answers

1. As per Accounting Standard-3, Cash Flow is classified into

a) Operating activities and investing activities


b) Investing activities and financing activities
c) Operating activities and financing activities
d) Operating activities, financing activities and investing activities

2. Cash Flow Statement is also known as

a) Statement of Changes in Financial Position on Cash basis


b) Statement accounting for variation in cash
c) Both a and b
d) None of the above.

3. The objectives of Cash Flow Statement are

A) Analysis of cash position


B) Short-term cash planning
C) Evaluation of liquidity
D) Comparison of operating Performance

a) Both A and B
b) Both A and C
c) Both B and D
d) A, B, C, D

4. In cash flow statement, the item of interest is shown in

A) Operating Activities
B) Financing Activities
C) Investing Activities

a) Both A and B
b) Both A and C
c) Both B and C
d) A, B, C
5. Cash Flow Statement is based upon

a) Cash basis of accounting


b) Accrual basis of accounting
c) Credit basis of accounting
d) None of the above

6. Which of the following statements are false?

A) Cash Flow Statement is helpful in the formation of policies.


B) Cash Flow Statement is useful for external analysis
C) Cash Flow Statement is helpful in estimating future cash flow

a) Both A and B
b) Both A and C
c) Both B and C
d) None of the above

7. Which of the following statements are true?

A) Cash flow reveals only the inflow of cash


B) Cash flow reveals only the outflow of cash
C) Cash flow is a substitute for income statement
D) Cash flow statement is not a replacement of funds flow statement.

a) Only A
b) Only B
c) Both B and C
d) Only D

Cash Flow From Operating Activities - MCQs with


answers
1. Cash Flow Statement is prepared from

a) Profit and loss account


b) Balance Sheet
c) Additional Information
d) All of the above

2. Which of the following are cash flow from operating activities?

A) Cash Receipts from customers


B) Cash Paid to Supplier and Employees
C) Purchase of fixed assets
D) Sale of fixed assets

a) Both A and B
b) Both A and C
c) Both B and C
d) Both C and D

3. Match the column

A) Taxes Paid ------------------ i) Cash flow from investing activities


B) Repayment of loans -------------- ii) Cash flow from operating activities
C) Sale of fixed assets ----------------------- iii) Cash Flow from financing activities

a) A-ii), B-iii), C-i)


b) A-i), B-ii), C-iii)
c) A-iii), B-i), C-ii)

4. Cash payment to suppliers for services and goods is example of cash outflow.

a) True
b) False

5. 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.

a) True
b) False

6. 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


b) Non-cash expenses from expenses incurred
c) Both a & b
d) None of the above

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

a) Indirect method
b) Direct method
c) Both a & b
d) None of the above

8. Cash flow from sales is calculated by

a) Cash sales + Cash Collections


b) Sales + Opening debtors+ Opening B/R –Closing Debtors – Closing B/R
c) Both a and b
d) None of the above

9. Cash outflow on purchases is calculated by

a) Purchases + Opening Creditors + Opening B/P –Closing Creditors-Closing B/P


b) Purchases + Opening Creditors - Closing Creditors +Closing B/P
c) Purchases - Opening Creditors - Opening B/P + Closing Creditors +Closing B/P
d) None of the above

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

a) Cash flow from sales


b) Cash outflow on purchases
c) Cash outflow on expenses
d) All of above are false

11. 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 45,000
b) Rs 35000
c) Rs 55,000
d) Rs 15,000

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

a) Net Profit after tax


b) Net profit before tax
c) Both and b
d) None of the above

13. Which of the following are added to net profit after tax and extraordinary items to reach to net
profit before tax and extraordinary items?

A) Provision for tax made during the year


B) Proposed dividend made during the year
C) Interim dividend
D) Transfer to General reserves and other reserves

a) Both A and B
b) Both A and C
c) Both B and C
d) A, B, C and D
Cash Flow From Investing & Financing Activities - MCQs
1. Which of the following are cash flow from investing activities?
A) Interest received
B) Dividend received
C) Sale of fixed assets
D) Purchase of fixed assets

a) Both A and B
b) Both A and C
c) Both B and C
d) A, B, C and D

2. Which of the following are cash flow from financing activities?


A) Interest received
B) Dividend received
C) Interest paid
D) Dividend paid

a) Both A and B
b) Both A and C
c) Both C and D
d) A, B, C and D

3. 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) None of the above

4. Which of the following statements represent example of cash flow from investing activities?
a) Cash advances and loans made by financial enterprises
b) Cash advances and loans made to third parties
c) Both a and b
d) None of the above

5. 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 59,200
b) Rs 28,800
c) Rs 72,800
d) None of the above
6. Financing activities brings changes in
a) Size and composition of owner’s equities
b) Borrowing of the enterprise
c) Both a and b
d) None of the above

7. For year 2013 Equity Share Capital is Rs 3,00,000 Preference Share Capital is 1,00,000 10%
debentures is 2,00,000 and Share premium is 30,000. For year 2014 Equity Share Capital is Rs
4,00,000 Preference Share Capital is 60,000 10% debentures is 1,00,000 and Share premium is
40,000. Also given, Dividend paid on shares Rs 15,000 and Interest paid on debentures RS 20,000.
Determine net cash flow from financing activities.

a) Cash inflow of Rs 65,000


b) Cash outflow of Rs 65,000
c) Cash inflow of Rs 56,000
d) Cash outflow of Rs 56,000

Cash Flow Statement & AS-3 - MCQs with answers


1. As per AS-3, Cash Flow Statement is mandatory for
A) All enterprises
B) Companies listed on a stock exchange
C) Companies with a turnover of more than Rs 50 crores

a) Both A and B
b) Both A and C
c) Both C and B

2. Listed Enterprises need to prepare Cash Flow Statement only under indirect method.

a) True
b) False

3. 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) None of the above
4. 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) Operating activities, financing activities


b) Financing activities, investing activities
c) Investing activities, operating activities
d) None of the above

5. Issue of bonus shares and conversion of debentures into equity are shown as a footnote to the
Cash Flow Statement.

a) True
b) False

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

a) Operating activities, financing activities


b) Financing activities, investing activities
c) Investing activities, operating activities
d) None of the above

7. Which of the following statements are false?

A) Old Furniture written off doesn’t affect cash flow.


B) Cash flow statement is a substitute for cash account.
C) Appropriation of retained earnings is not shown in Cash flow statement.
D) Net cash flow during a period can never be negative.

a) A, B, C
b) B, C, D
c) C, D, A
d) None of the above

8. Which of the following is not a cash inflow?


a) Decrease in debtors
b) Issue of shares
c) Decrease in creditors
d) Sale of fixed assets

9. Which of the following is not a cash outflow?


a) Increase in Prepaid expenses
b) Increase in debtors
c) Increase in stock
d) Increase in creditors

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