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This set of Analysis of Financial Statements Multiple Choice Questions & Answers (MCQs) focuses on Cash Flow Statement
Q1 | 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 ____.
- operating activities, financing activities
- financing activities, investing activities
- investing activities, operating activities
- none of the above
Q2 | When a fixed asset is bought as hire purchase, interest element is classified under ______ and loanelement is classified under________.
- operating activities, financing activities
- financing activities, investing activities
- investing activities, operating activities
- none of the above
Q3 | Which of the following statements are false?
- old furniture written off doesn’t affect cash flow.
- cash flow statement is a substitute for cash account.
- appropriation of retained earnings is not shown in cash flow statement.
- net cash flow during a period can never be negative.
Q4 | Which of the following is not a cash outflow?
- increase in prepaid expenses
- increase in debtors
- increase in stock
- increase in creditors
Q5 | Cash flow statement is prepared for financial planning of
- long range
- medium range
- short range
- very long range
Q6 | Which of the following is source of cash?
- cash deposited into bank
- cash withdrawn from bank
- sale of goods costing ₹10,000 for ₹8,000
- sale of marketable securities for cash
Q7 | Which of the following is not source of cash?
- issue of shares
- purchase of machinery
- sale of asset
- dividend received
Q8 | Which of the following is not application of cash?
- increase in debtors
- increase in inventory
- increase in bills payable
- increase in prepaid expenses
Q9 | If 6% Pref. share capital ₹2,00,000 were redeemed at a premium of 5%, while preparing Cash FlowStatement its effect on cash flow will be :
- cash used from financing activities ₹2,12,000
- cash received from financing activities ₹2,12,000
- cash used (payment) from financial activities ₹2,10,000
- cash used (payment) from financial activities ₹2,00,000
Q10 | If the amount of goodwill is ₹40,000 at the beginning of a year and ₹48,000 at the end of that year thenwhile preparing cash flow statement its effect on cash flow will be :
- cash used (payment) in investing activities ₹8,000
- cash received from operating activities ₹8,000
- cash used (payment) from operating activities ₹8,000
- cash used (payment) from financial activities ₹8,000
Q11 | How will you deal increase in the balance of ‘Securities Premium Reserve’ while preparing a Cash FlowStatement?
- cash flow from operating activities
- cash flow from investing activities
- cash flow from financing activities
- cash equivalent
Q12 | A Ltd., engaged in the business of retailing of two wheelers, invested ₹50,00,000 in the shares of amanufacturing company. Dividend received on this investment will be :
- cash flow from operating activities
- cash flow from investing activities
- cash flow from financing activities
- cash equivalent
Q13 | How will you treat Bank Overdraft in a Cash Flow Statement?
- cash flow from operating activities ’
- cash flow from investing activities
- cash flow from financing activities
- cash equivalent
Q14 | Where will you show purchase of Goodwill in a Cash Flow Statement?
- cash flow from operating activities
- cash flow from investing activities
- cash flow from financing activities
- cash equivalent
Q15 | How will you treat payment of ‘Interest on Debentures’ while preparing a Cash Flow Statement?
- cash flow from operating activities
- cash flow from investing activities
- cash flow from financing activities
- cash equivalent
Q16 | State whether cash deposited in bank will be classified under which kind of activity?
- cash flow from operating activities
- cash flow from investing activities
- cash flow from financing activities
- no cash flow
Q17 | A company has to prepare its balance sheet once in..
- six months
- two years
- a year
- as and when it needs
Q18 | Income statement of a business shows…
- net profit
- net operating result of specified period
- net loss
- none of these
Q19 | The statement which shows the periodical increase or decrease of funds is called___________statement.
- funds flow
- cash flow
- income
- working capital
Q20 | Fund flow statement is based on the concept of…
- business entity
- accounting period
- going concern
- all of the above
Q21 | Funds means…
- money
- cash
- machinery
- any form of financial resources
Q22 | Which of the following is the component of current assets?
- stock
- prepaid expenses
- income earned but not received
- all of the above
Q23 | The term flow of funds refers to…
- change in funds
- change in working capital
- both
- none
Q24 | Transaction between_________ may cause the flow of funds.
- current assets and fixed assets
- current assets and long term liabilities, and capital
- current liabilities and fixed assets
- all of the above
Q25 | The term current account refers to….
- current assets
- current liabilities
- both
- none