Breaking News

Saturday, September 12, 2020

MCQ - Cash Flow Statement | Cash Flow Statement Multiple Choice Questions and Answers | Cash Flow Analysis Quiz


Cash flow statement Multiple Choice Questions and Answers (MCQs)

For B.Com/CMA/CS/CA examination
State whether the following statements are true or false:
1. Cash flow statement is useful for short-term financial planning.             True
2. Cash flow statement is based on accrual basis of accounting.      False, Cash Basis
3. Cash flow statement deals with flow of cash which includes cash equivalent as well as cash. True
4. Cash flow statement is a substitute of cash account.        False
5. Cash flow statement is a summary of cash receipts and disbursements during a certain period.            True
6. Cash flow statement is prepared as per AS-3 (Revised).   True
7. Whenever there is inflow of cash there will definitely be inflow of funds though reverse is not true.            True

8. There are two methods for preparing cash flow statement: (i) Direct method (ii) Indirect method.  True
9. Cash flow statement shows cash inflows and outflows from (i) Operating activities (ii) Investing activities (iii) Financing activities.                      True
10. Cash flow statement is concerned with changes in working capital position between two balance sheet dates.              False
11. Cash generated from trading operations is equal to the net profit as reported in the profit and loss account.          False
12. Operating activities are the revenue generating activities of the enterprise.    True
13. Financing activities constitute the purchase and sale of long term assets and other investments not included in cash and its equivalents.  False, Investing activities
14. Investing activities are activities that result in change in the share capital and borrowings of the enterprise. False, Financing Activities
15. The cash flows from extraordinary items are to be stated separately as arising from operating, investing and financing activities.                  True
16. Decrease in the amount of debtors results in increase in cash.  False
17. Increase in the amount of debtors results in decrease in cash.  True
18. Increase in the amount of creditors results in increase in cash. True
19. Cash lost in operations is not equal to the net loss as reported in the profit and loss account. True
20. Decrease in current liabilities is a source of cash.          False, it is an application
21. Cash flow reports are generally prepared at the end of accounting year.                     True
22. Cash flow reports are prepared on cash basis of accounting.     True
Fill in the blanks:
a) The cash flows statement is a statement of inflows and outflows of cash and Cash Equivalents.
b) Cash comprises cash on hand and demand deposits with banks.
c) Cash Equivalents are short-term, highly liquid investments that are readily convertible cash
d) The cash flow from operating activities are derived from the principle revenue producing activities of the organisation.
e) Increase in current asset is an outflow of cash.
f) Increase in current liability is an inflow of cash.
Choose the correct answers:
1. Cash flow statement is based upon:
a) Cash basis
b) Accrual Basis
c) Accounting Equation
2. Increase in amount of prepaid expense results in:
a) Increase in cash
b) Decrease in cash
c) No change in cash
3. Interest received/Paid by financial enterprise is shown in the cash flow statement under:
a) Operating Activities
b) Investing Activities
c) Financing Activities
4. Interest Paid by other than financial enterprise is shown in the cash flow statement under:
a) Operating Activities
b) Investing Activities
c) Financing Activities
5. Interest received by other than financial enterprise is shown in the cash flow statement under:
a) Operating Activities
b) Investing Activities
c) Financing Activities
6. Dividend received by financial enterprise is shown in the cash flow statement under:
a) Operating Activities
b) Investing Activities
c) Financing Activities
7. Dividend received by other than financial enterprise is shown in the cash flow statement under:
a) Operating Activities
b) Investing Activities
c) Financing Activities
8. Examples of cash flow from operating activities:
Ø  Cash receipts from the sale of goods and rendering of services. (Source)
Ø  Cash payments to suppliers of goods and services. (application)
Ø  Cash receipts from royalties, fees, commission and other revenue. (Source)
Ø  Cash payments to and on behalf of employees for wages, etc. (application)
Ø  Cash payments and refunds of income taxes. (application)
9. Examples of cash flow from investing activities:
Ø  Cash payments to acquire long term fixed assets (tangible and intangible) and investments. (application)
Ø  Cash receipts from the disposal of long term fixed assets (including intangibles) and investments. (Source)
Ø  Cash payments for purchase or of shares, warrants, or debt instruments of other enterprises and interest in joint ventures. (application)
Ø  Cash receipts from sale of shares, warrants, debt instruments of other enterprises and interest in joint ventures. (source)
Ø  Cash receipts from repayments of advances and loans made to third parties. (source)
10. Example of cash flow from financing activities:
Ø  Cash proceeds from the issue of shares or other similar instruments. (source)
Ø  Cash proceeds from the issue of debentures, loans, bonds and other short term borrowings. (source)
Ø  Buy-back of equity shares. (application)
Ø  Cash repayments of the amounts borrowed including redemption of debentures. (application)
Ø  Payments of dividends and interest on borrowings. (application)

No comments:

Post a comment

Kindly give your valuable feedback to improve this website.

Popular Posts for the Day