CBSE Class 12 Accountancy Cash Flow Statement MCQs Set A

Question: Sale of Copyrights is concerned with_______

a) Investing Activities

b) Operating Activities

c) Both Operating Activities and Financing Activities

d) Financing Activities

Answer: A

Question: Dividend Received is concerned with_________

a) Investing Activities

b) Operating Activities

c) Financing Activities

d) Both Operating Activities and Financing Activities

Answer: A

Question: Refund of income tax is the part of

a) Operating activities in Cash Flow Statement

b) Financing Activities in Cash Flow Statement

c) Investing Activities in Cash Flow Statement

d) All of the options

Answer: Operating activities in Cash Flow Statement

Question: Rent received is classified under

a) Investing Activities

b) Operating Activities

c) Cash and Cash Equivalents

d) Financing Activities

Answer: A

Question: In indirect method, Which is used to calculate the amount of net cash flow from operating activities

a) Net income figure from the income statement

b) Net loss figure from Profit & Loss

c) Net Profit figure from Profit & Loss

d) All of the options

Answer: A

Question: Which activities are the same for Computation of Direct and indirect method

a) Cash Flow from Financing Activities and Cash flow from Investment activities

b) Cash Flow from Operating Activities and Cash flow from Investment activities

c) Cash Flow from Operating Activities and Cash flow from Financial activities

d) All of the options

Answer: A

Question: The main difference in direct and indirect method is to calculate the

a) Cash flow from operating activities

b) Cash Flow from Financing Activities

c) Cash Flow from Investing Activities

d) All of the options

Answer: A

Question: Which is the Method for the preparation of cash flow statement

a) Both Direct and Indirect

b) Direct Method

c) Indirect Method

d) Average Method

Answer: A

Question: How many methods for the preparation of cash flow statement

a) 2

b) 3

c) 4

d) 5

Answer: A

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

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 outflow

b) Cash inflow

c) Not related to cash

d) All of the options

Answer: A

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: 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: Cash flows from investing activities are those

a) All of the options

b) Property

c) Plant

d) Intangible assets.

Answer: A

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 Operating Activities

b) Cash Flow from Financing Activities

c) Cash Flow from Investing Activities

d) None of these

Answer: A

Question: The primary objective of cash flow statement is to provide useful information about

a) Cash Flow

b) Net Profit

c) Net Loss

d) All of the options

Answer:A

Question: A cash flow statement shows

a) Both Inflow and Outflow

b) Inflow cash

c) Outflow cash

d) Not related to cash

Answer: A

Question: For calculating cash flow from operating activities, provision for doubtful debts is __________the profit made during the year

a) Added to

b) Deducted from

c) Divided to

d) All of the options

Answer: A

Question: An increase in accrued income during the particular year is ____________for calculating the cash flow from operating activities (added to/deducted from).

a) Added to

b) Deducted from

c) Divided to

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: 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. 60,000

b) Rs. 40,000

c) Rs. 70,000

d) Rs. 50000

Answer: A

Question: If the net profits earned during the year is Rs. 50,000 and the amount of debtors in the beginning and the end of the year is Rs. 10,000 and Rs.20,000 respectively, then the cash from operating activities will be equal to Rs.

a) Rs. 40,000

b) Rs. 60,000

c) Rs. 70,000

d) Rs. 50000

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: Net Profit for the year Rs. 15000 , Interest Received in advance on 1st Jan 2004 Rs. 2000 and 31st December 2004 Rs. 3000, Cash from operation will be

a) Rs. 16000

b) Rs. 22000

c) Rs, 13000

d) Rs. 15000

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. 22000

b) Rs. 42000

c) Rs. 28000

d) Rs. 30000

Answer: A

Question: Total sales Rs. 200000, Debtors at the beginning Rs. 15000, Debtors at the ending Rs. 28000, Cash Sale will be

a) Rs. 187000

b) Rs 213000

c) Rs. 215000

d) Rs. 210000

Answer: A

Question: Which of the following is an example of non cash Exp

a) Depreciation

b) Wages and salaries

c) Telephone Exp

d) All of the options

Answer: A

Question: If the net operating profit of a business is Rs. 90000 and the debtors have decreased during the year by Rs. 30000, cash from operation equal to

a) Rs. 120000

b) Rs. 90000

c) Rs. 60000

d) Rs. 50000

Answer: A

Question: Cash from operation will increase due to

a) Decrease in stock

b) Increase in stock

c) Increase in Bills receivable

d) Decrease in Bills receivable

Answer: A

Question: Cash flow statement is prepared from

a) All of the options

b) Balance sheet

c) Profit and Loss

d) Additional Information

Answer: A

Question: Cash from operation will decrease due to

a) Increase in Current assets

b) Decrease in Current assets

c) Increase in Current Liabilities

d) Decrease in Current Liabilities

Answer: A

Question: Increase in the amount of bills receivable results in

a) Decrease in cash

b) Increase in cash

c) No change in cash

d) All of the options

Answer: A

Question: Which of the following is not a cash outflow

a) Increase in outstanding Exp.

b) Increase in Prepaid Exp.

c) Increase in Stock

d) Increase in Bills receivable

Answer: A

Question: Which of the following is not a cash inflow

a) Purchase of fixed assets

b) Sale of goods

c) Issue of debentures

d) Sales of fixed assets

Answer: A

Question: Acquisition of assets or Acquisition of an enterprise by means of issue of shares and debentures is _________ transaction

a) Non Cash

b) Cash

c) Both

d) None of these

Answer: A

Question: According to AS-3 (Revised) redemption of preference share is _______ activity

a) Financing

b) Investing

c) Operating

d) All of the options

Answer: A

Question: Marketable securities is treated as ___________ in cash flow statement

a) Cash equivalent

b) Non Cash equivalent

c) Both

d) All of the options

Answer: A

Question: An example of cash flow from investing activity is :

a) Issue of debenture

b) Repayment of long-term loan

c) Purchase of raw materials for cash

d) Sale of investment by non-financial enterprise.

Answer: D

Question: An example of Cash Flows from Investing Activity is :

a) Cash Revenue from Operations

b) Commission Received

c) Payment of cash for purchase of fixed assets

d) Dividend paid

Answer: C

Question: An Example of cash flow from financing activity is :

a) Payment of dividend

b) Receipt of dividend on investment

c) Cash received from customer

d) Purchase of fixed asset

Answer: A

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: A

Question: How will you classify loans given by Tata Finance Company?

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: How will you classify deposits by customers in Axis Bank?

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: Which of the following item is considered as Cash Equivalents?

a) Marketable Securities

b) Debtors

c) Investment

d) Bills of Exchange

Answer: A

Question: Which of the following is considered as Cash Equivalents?

a) Bank deposits for 2 months

b) Commercial Papers

c) Treasury Bills

d) All of the above

Answer: D

Question: Cash deposit with the bank with a maturity date after two months belongs to which of the following in the cash flow statement:

a) Investing activities

b) Financing activities

c) Cash and Cash equivalents

d) Operating activities

Answer: C

Question: Which of the following is shown under Financing Activity?

a) interest paid

b) Commission Received

c) Cash received against sale of goods

d) Cash paid for purchase of goods.

Answer: A

Question: Which of the following is not included in Cash and Cash Equivalents?

a) Balances with Banks

b) Bank deposits with 100 days of maturity

c) Cheques and Drafts on hand

d) Cash on hand

Answer: B

Question: Which of the following is not part of Cash and Cash Equivalents?

a) Inventories

b) Current investments

c) Short-term Deposits

d) Marketable Securities

Answer: A

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?

a) investing Activities

b) Financing Activities

c) Both Investing and Financing Activities

d) Operating Activities

Answer: D

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 above.

Answer: B

Question: Angel Ltd., a stock broker, purchased 5,000 shares of Tata Housing Ltd. it is

a) Operating Activity.

b) Investing Activity.

c) Financing Activity.

d) General Activity.

Answer: B

Question: According to AS-3 (Revised) purchase of fixed assets is

a) Investing

b) Operating

c) Financing

d) All of the options

Answer: A

Question: AS-3 (revised ) deals with statement of changes in financial position on ________

a) Cash Basis

b) Non Cash Basis

c) On Accrual Basis

d) All of the options

Answer: A

Question: Increase in stock results in _____________ of cash

a) Outflow cash

b) Inflow cash

c) No change in cash

d) All of the options

Answer: OA

Question: Increase in creditors results in _____________ of cash

a) Inflow cash

b) Outflow cash

c) No change in cash

d) All of the options

Answer: A

Question: Refund of income tax is a __________

a) Inflow cash

b) Outflow cash

c) No change in cash

d) All of the options

Answer: A

Question: Cash flow statement is based upon _________ basis of accounting

a) On Cash basis

b) On Accrual Basis

c) Non Cash Basis

d) All of the options

Answer: A

Question: Which is the classification of cash flow statement

a) All of the options

b) Cash Flow from Operating Activities

c) Cash Flow from Financing Activities

d) Cash Flow from Investing Activities

Answer: A

Question: Redemption of Preference shares comes under

a) Cash Flow from Financing Activities

b) Cash Flow from Operating Activities

c) Cash Flow from Investing Activities

d) All of the options

Answer: A

Question: Cash flow statement is useful for

a) Short Term financial analysis

b) Long Term financial analysis

c) 10 Years

d) 5 Years

Answer: A

Question: The word fund means the difference of _______ and _______

a) Current Assets and Current Liabilities

b) Sundry Creditors and Sundry Debtors

c) Profit and Loss

d) All of the options

Answer: A

Question: Cash Receipts from sale of goods by a trading company come under which activity while preparing cash flow statement?

a) Operating Activity

b) Investing Activity

c) Operating and Financing Activities

d) Financing Activity

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: Purchase of office equipment will affect

a) Investing Activities

b) Operating Activities

c) Financing Activities

d) Both Operating and Financing Activities

Answer: A 

Question: Purchase of shares of other company will be considered as

a) Investing activities

b) Operating Activities

c) Financing Activities

d) All of the options

Answer: A

Question: Decrease in value of Patents

a) Add (operating activities)

b) Less (operating activities)

c) Add (Investing activities)

d) Add (Financing activities)

Answer: A

Question: Purchase of plant and machinery will be

a) Deducted in investing activities

b) Deducted in Financing Activities

c) Added in Investing Activities

d) Added in Financing Activities

Answer: A

Question: Loss on sale of furniture will be

a) Add (operating activities)

b) Less (Investing activities)

c) Less (operating activities)

d) Add (Investing activities)

Answer: A

Question: Cash deposit with the bank with a maturity date after two months belongs to which of the following

a) Cash and Cash Equivalents

b) Investing Activities

c) Financing Activities

d) Both Investing and Financing

Answer: A

Question: Payment of dividend will come under financing activities when it is paid by_____

a) All of these

b) Manufacturing Company

c) Trading Company

d) finance Company

Answer: A

Question: Which items will be added in operating activities

a) All of the options

b) Decrease in stock

c) Increase in creditors

d) Increase in outstanding expenses

Answer: A

Question: What will be effect of Decrease in Trade receivables on cash Inflow

a) Add in operating activities

b) Less in financing activities

c) Add in financing activities

d) Less in operating activities

Answer: A

Question: Which is shown as addition in financing activities

a) Increase in Bank Overdraft

b) Decrease in Bank Overdraft

c) Both Increase and Decrease in Bank Overdraft

d) Redemption of Debentures

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: Which is not considered with operating activities:

a) Issue of Equity shares

b) General Reserve

c) Income tax

d) Loss on sale of assets

Answer: A

Question: Interest received will be considered as financing activity when________

a) Interest received on calls in arrear

b) Redemption of debentures takes place

c) Bank overdraft is settled

d) Interest received on investments

Answer: A

Question: Dividend paid by a finance company comes under_______

a) Operating Activities

b) Investing Activities

c) Manufacturing Activity

d) Financing Activity

Answer: A

Question: Dividend Received is considered as operating activity when______

a) Received by a finance company

b) Received by a Trading Company.

c) Received by a manufacturing company

d) Received by any company

Answer: A

Question: Mention the net amount of sourceof cash when a fixed asset (having book value of Rs. 15,000) is sold at a loss of Rs. 5,000.

a) Rs. 10000

b) Rs. 15000

c) Rs. 20000

d) Rs. 30000

Answer: A

Question: Which of the following is concerned with financing activities

a) Interest paid on long term loans

b) Rent Received

c) Sale of investment

d) Income tax paid

Answer: A

Question: While calculating cash flow statement form investment activities following items should be added except?

a) Cash paid for purchase of Non-current Investment

b) Cash received from sale of investments

c) Interest received

d) Cash received from sale of fixed assets

Answer: A

Question: Increase in the balance of Securities premium reserve will be________________

a) Add in Financing Activities

b) Less in Financing Activities

c) Add in Investing Activities

d) Less in Investing Activities

Answer: A

Question: Increase in the Computer Software (asset) will be

a) Deducted in Investing activities

b) Added in Operating Activities

c) Deducted in Operating Activities

d) Added in Investing activities

Answer: A

Question: Cash and Cash Equivalents

a) Operating Activities

b) Financing Activities

c) Investing Activities

d) Not concerned with any activity

Answer: A

Question: Conversions of debentures into equity shares will be_______

a) No Effect

b) Operating Activity

c) Investing Activity

d) Cash and Cash Equivalents

Answer: A

Question: Increase in Bank Overdraft balance _____________

a) Add in Financing Activities

b) Add in Operating Activities

c) Less in Operating Activities

d) Less in Financing Activities

Answer: A

Question: For purpose of preparing cash flow statement, which of the following is not considered as a cash equivalent

a) Investment in Bonds

b) Commercial paper

c) Marketable securities

d) Treasury Bills

Answer: A

Question: Cash Credit is concerned with __________

a) Financing Activities

b) Investing Activities

c) Operating Activities

d) Cash and Cash Equivalents

Answer: A

Question: Which of the following item is not added or deducted while preparing cash flow statement

a) Bonus shares issued

b) Dividend Paid

c) Purchase of goodwill

d) Dividend Received

Answer: A

Question: Which of the following transactions would not create a cash flow

a) Amortization of a patent.

b) Payment of dividend.

c) Sale of office equipment at book value.

d) Goods purchased in cash

Answer: A

Question: Interest paid on bank overdraft will come in __________

a) Financing activities

b) Investment activities

c) Both finance and investing activities

d) Less in operating activities

Answer: A

Question: Adjustment for Proposed Dividend is:

a) Add previous year's proposed dividend under net profit before tax and extra-ordinary items and deduct it under Financing Activity.

b) Add current year's proposed dividend under net profit before tax and extraordinary items and deduct previous year's proposed dividend under Financing Activity.

c) Add current year's proposed dividend under Net Profit before Tax and Extraordinary items and deduct current year's proposed dividend under Financing Activity.

d) None of the above.

Answer: A

Question: Buy-back of shares is an extra-ordinary item for

a) Operating Activities.

b) investing Activities.

c) Financing Activities.

d) Cash and Cash Equivalents.

Answer: C

Question: Voluntary retirement compensation paid to employees is an example of extraordinary item for

a) Operating Activities.

b) Investing Activities.

c) Financing Activities.

d) Cash and Cash Equivalents.

Answer: A

Question: Cash flow statement is prepared for financial planning of ..................

a) Long range

b) Medium range

c) Short range

d) Very Long range

Answer: C

Question: Which of the following is source of cash?

a) Cash deposited into Bank

b) Cash withdrawn from Bank

c) Sale of Goods costing Rs. 10,000 for Rs.8,000

d) Sale of marketable securities for cash

Answer: C

Question: Which of the following is not source of cash?

a) Issue of shares

b) Purchase of Machinery

c) Sale of Asset

d) Dividend received

Answer: B

Question: An example of cash flow from operating activity is :

a) Purchase of own debenture

b) Sale of fixed assets

c) Interest paid on term-deposits by a bank

d) Issue of equity share capital

Answer: C

Question: An example of Cash Flow from Operating Activity is :

a) Cash receipts from sale of goods and services

b) Sale of long-term investments

c) Interest Received

d) Issue of Debentures

Answer: A

Question: Which of the following is an example of cash flow from Operating Activities?

a) Issue of Shares

b) Purchase of Machinery

c) Purchase of Investment

d) Purchase of Inventory for Cash

Answer: D

Question: Dividend paid by a manufacturing 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: Interest paid by an investment company will come 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: A

Question: Which of the following item is not considered as Cash Equivalents?

a) Short term Deposits in Bank

b) Commercial Papers

c) Treasury Bills

d) Investment

Answer: D

Question: Kaveri Ltd. a financing company, obtained loan and advances of ? 5,00,000 during the year @ 12% p.a. It will be included in which of the following activities while preparing the Cash Flow Statement?

a) Investing Activities

b) Financing Activities

c) Both Investing and Financing Activities

d) Operating Activities

Answer: D

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 of Rs. 3,50,000.

d) Cash deposited into bank Rs. 15,000.

Answer: D