200 MCQs of Cash Flow Statement Accountancy Class 12

Looking for MCQS of Cash Flow Statement of Accountancy class 12 for CBSE, ISC, CUET/CUCET entrance

We have compiled more than 200 MCQs with answers and explanations of the Cash flow statement chapter of accounts for class 12 and the CUET/CUCET entrance exam.

Multiple Choice Questions of Cash Flow Statement of Accounts class 12

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Dividend received by other than financial enterprise is shown in the Cash Flow Statement under

a) Operating Activities
b) Investing Activities
c) Financing Activities
d) General Activities

Ans – b)

Cash Flow Satement is based on

a) Accrual basis of accounting
b) Cash basis of accounting
c) Mixed basis of accounting
d) None of these

Ans – b)

The dividend received by the financial enterprise is shown in the Cash Flow Statement under

a) Operating Activities
b) Investing Activities
c) Financing Activities
d) General Activities

Ans – a)

Interest received on investments is shown in the Cash Flow Statement under

a) Operating Activities
b) Investing Activities
c) Financing Activities
d) None of these

Ans – b)

Payment of Income Tax is shown as

a) Operating Activities
b) Investing Activites
c) Finanacing Activities
d) General Activities

Ans – a)

Interset paid is shown in Cash Flow Statement under

a) Operating Activities
b) Investing Activities
c) Financing Activities
d) None of these

Ans – c)

A dividend paid by a financial company is shown as cash outflow under

a) Operating Activties
b) Investing Activities
c) Financing Activities
d) Cash and Cash Equivalent

Ans – c)

Dividend received is shown in Cash Flow Statement under

a) Operating Activities
b) Investing Activities
c) Financing Activities
d) None of these

Ans – b)

A dividend paid by a non-financial company is shown as

a) Operating Activity
b) Investing Activity
c) Financing Activity
d) Cash and Cash Equivalent

Ans – c)

Payment of Income Tax is shown as

a) Operating Activities
b) Investing Activities
c) Financing Activities
d) General Activities

Ans – a)

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 the purchase of goods

Ans – a)

Dividend paid is shown as

a) Operating Activity
b) Investing Activity
c) Financing Activity
d) Cash and Cash Equivalent

Ans – c)

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

a) Balances with banks
b) Debentures purchased maturing after 100 days of purchase.
c) Cheques and Drafts on hand
d) Cash on Hand

Ans – b)

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

Ans – a)

Which of the following is not a part of Cash and Cash Equivalents?

a) Inventories
b) Current Investments
c) Short-term Deposits
d) Marketable Securities

Ans – a)

Which of the following is not included in Cash and Cash Equivalents

a) Balance with Banks
b) Debentures purchased maturing after 100 days of purchase
c) Marketable Securities
d) Cash on Hand

Ans – b)

Which of the following is not added as a Non-Cash Expense?

a) Goodwill amortized
b) Depreciation
c) Interest on Debentures paid
d) All of these

Ans – c)

To Calculate Cash Flow Operating Activities, which of the following will be deducted?

a) Decrease in Inventories
b) Increase in Trade Payables
c) Decrease in Trade Payables
d) Decrease in Trade Receivables

Ans – c)

ABC Ltd. has Machinery written down value of which on 1st April 2019 was ₹ 8,60,000 and on 31st March, 2020 was ₹ 9,50,000. Depreciation for the year was ₹ 40,000. At the beginning of the year, a part of the machinery was sold for ₹ 25,000, which had a written down value of ₹ 20,000. Calculate Cash Flow from Investing Activities.

a) ₹ 1,25,000
b) ₹ (1,25,000)
c) ₹ 2,50,000
d) ₹ (2,50,000)

Ans – b)

Refer to Q. above to calculate Gain (Profit) on Sale of Machinery.

a) ₹ 6,000
b) ₹ 5,000
c) ₹ 10,000
d) ₹ 12,000

Ans – b)

Refer to Q above, Calculate the amount of purchase of Machinery.

a) ₹ 1,50,000
b) ₹ 3,00,000
c) ₹ 4,50,000
d) ₹ 50,000

Ans – a)

Exe Ltd. has a balance in Provision for Tax Account of ₹ 50,000 and ₹ 75,000 as of 31st March, 2019 and 2020 respectively. It made a provision for tax during the year of ₹ 65,000. The amount of tax paid during the year was

a) ₹ 50,000
b) ₹ 60,000
c) ₹ 40,000
d) ₹ 75,000

Ans – c)

Exe Ltd. has balance in Provision for Tax Account of ₹ 50,000 and ₹ 75,000 as on 31st March, 2020 and 2021 respectively. It made a provision for tax during the year of ₹ 65,000. The amount of tax paid during the year was

a) ₹ 50,000
b) ₹ 60,000
c) ₹ 40,000
d) ₹ 75,000

Ans – c)

While preparing the Cash Flow Statement, ‘Interest paid on debentures’ will be considered as

a) Operating Activity
b) Financing Activity
c) Investing Activity
d) Both Operating and Financing Activity

Ans – b)

Interest paid on Debentures is

a) Operating Activity
b) Financing Activity
c) Investing Activity
d) Both Operating and Financing Activity

Ans – b)

Amongst the following ‘payment of bonus to the employees’ by an insurance company is which type of activity?

a) Operating Activity
b) Investing Activity
c) Financing Activity
d) Both operating and Financing Activity

Ans – a)

GSC Ltd. purchased machinery of ₹ 10,00,000 issuing a cheque of ₹ 2,50,000 and 10% Debentures of ₹ 7,50,000. In the Cash Flow Statement, the transaction will be shown as

a) Outflow under Investing Activity ₹ 10,00,000, inflow under Financing Activity as Receipt for debentures ₹ 7,50,000.
b) Outflow under Investing Activity ₹ 2,50,000
c) Inflow of ₹ 7,50,000 as Financing Activity
d) None of the above

Ans – b)

Adjustment for Proposed Dividend is:

a) Add the previous year’s proposed dividend under net profit before tax and extraordinary items and
deduct it under Financing Activity.
b) Add the 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 the 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

Ans – a)

An investment normally qualifies as cash equivalent only when from the date of acquisition it has a short maturity period of

a) one month or less
b) three months or less
c) three months or more
d) one year or less

Ans – b)

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

a) Operating Activities
b) Investing Activities
c) Financing Activities
d) Cash and Cash Equivalents

Ans – c)

Which of the following transactions will result into inflow of cash?

a) Cash withdrawn from bank ₹ 20,000.
b) issued 20,000, 9% Debentures to the vendor of machinery
c) Received ₹ 19,000 from debtors
d) Deposited cheques of ₹ 10,000 into bank

Ans – c)

X Ltd. purchased furniture for ₹ 20,00,000 paying 60% by the issue of equity shares of ₹ 10 each and the balance by a cheque. This transaction will result in

a) Cash Used in Investing Activities ₹ 20,00,000.
b) Cash Generated from Financing Activities ₹ 12,00,000.
c) Increase in Cash and Cash Equivalents ₹ 8,00,000
d) Cash used in Investing Activities ₹ 8,00,000

Ans – d)

Which of the following transactions will not result into flow of cash?

a) Issue of equity shares of ₹ 1,00,000.
b) Purchase of machinery of ₹ 1,75,000.
c) Redemption of 9% Debentures of ₹ 3,50,000
d) Cash deposited into bank ₹ 15,000

Ans – d)

Which of the following transactions will result into ‘Flow of Cash’?

a) Deposited ₹ 10,000 into the bank
b) withdrew cash from the bank ₹ 14,500
c) Sale of Machinery of the book value of ₹ 74,000 at a loss of ₹ 9,000.
d) Converted ₹ 2,00,000, 9% Debentures into equity sahres.

Ans – c)

Paid ₹ 7,00,000 to purchase sahres in K.L Ltd. and received a dividend of ₹ 20,000 after acquisition. These transactions will result in

a) Cash used in investing activities ₹ 7,00,000
b) Cash Generated from Financing Activities ₹ 7,20,000
c) Cash generated from Financing Activities ₹ 6,80,000
d) Cash used in Investing Activities ₹ 6,80,000

Ans – d)

‘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

Ans – d)

Adjustment for proposed Dividend is:

a) Add previous years proposed dividend to net profit before tax and educt it under Financing Activity.
b) Add Current year’s proposed dividend under net profit before tax and deduct previous year’s proposed dividend under Financing Activity
c) Add current year’s proposed dividend under Net profit before Tax and deduct current year’s proposed dividend under Financing Activity.
d) None of the above

Ans – a)

GSC Ltd. purchased machinery of ₹ 10,00,000 issuing a cheque of ₹ 2,50,000 and 10% Debentures of ₹ 7,50,000. In the Cash Flow Statement, the transaction will be shown as

a) Outflow under Investing Activity ₹ 10,00,000, inflow under Financing Activity as Receipt for Debentures ₹ 7,50,000.
b) Outflow under Investing Activity ₹ 2,50,000
c) Inflow of ₹ 7,50,000 as Financing Activity
d) None of the above

Ans – b)

Cash deposited into Bank would result in