200 MCQs of Cash Flow Statement Accountancy Class 12
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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
Lets Practice
Cash Flow Statement is based on
(a) Cash Basis of Accounting
(b) Accrual Basis of Accounting
(c) Accounting Equation
(d) None of these
Ans:- (a)
Cash Flow statement is prepared for financial planning of _ .
(a) Long range
(b) Medium range
(c) Short range
(d) Very Long range
Ans:- (c)
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)
Which of the following is source of cash?
(a) Deposited ₹ 40,000 into Bank
(b) Cash withdrawn from Bank ₹ 54,000
(c) Sale of Goods costing ₹ 50,000 for ₹ 40,000
(d) Sale of marketable securities for ₹ 25,000 at par.
Ans:- (c)
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)
Which of the following transaction will result in no flow of cash?
(a) Purchase of machinery
(b) Sale of investments
(c) Acquisition of machinery by issue of equity shares
(d) Redemption of debentures
Ans:- (c)
What will be the effect of transaction ‘Payment of employee benefit expenses’ on the Cash Flow Statement?
(a) Outflow from Operating Activities
(b) Outflow from Investing Activities
(c) Outflow from Financing Activities
(d) No effect on Cash Flow
Ans:- (a)
Which of the following transaction will result in no flow of cash?
(a) Purchase of machinery
(b) Sale of investments
(c) Acquisition of machinery by issue of equity shares
(d) Redemption of debentures
Ans:- (c)
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)
Which of the following is not source of cash?
(a) Issue of shares
(b) Purchase of Machinery
(c) Sale of Asset
(d) Dividend received
Ans:- (b)
Dividend received on shares held for sale by financial enterprise is shown in 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)
Which of the following is not application of cash?
(a) Increase in Debtors
(b) Increase in Inventory
(c) Increase in Bills Payable
(d) Increase in Prepaid Expenses
Ans:- (c)
Which of the following is not an investing activity under cash flow statement?
(a) Purchase of marketable securities for ₹ 25,000 for cash
(b) Sale of land for ₹ 2,80,000 for cash
(c) Sale of 2,500 shares (held as investment) for ₹ 15 each
(d) Purchase of equipment for ₹ 1,00,000 for cash
Ans:- (a)
Payment of Income Tax is shown as
a) Operating Activities
b) Investing Activites
c) Finanacing Activities
d) General Activities
Ans:- (a)
Cash from operating activities consists of:
(a) Operating Profit
(b) Decrease/Increase in Current Assets
(c) Decrease/Increase in Current Liabilities
(d) All of the above
Ans:- (d)
While preparing Cash Flow Statement, ‘Commission and Royalty’ received is shown under:
(a) Financing Activity
(b) Investing Activity
(c) Operating Activity
(d) Both (B) and (C)
Ans:- (c)
Interset paid is shown in Cash Flow Statement under
a) Operating Activities
b) Investing Activities
c) Financing Activities
d) None of these
Ans:- (c)
While calculating operating profit which will be added to net profit:
(a) Gain on Sale of Machinery
(b) Increase in General Reserves
(c) Interest Received on Investments
(d) Decrease in Trade Payables
Ans:- (b)
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)
While calculating cash flow from operating activities which will be deducted:
(a) Decrease in Prepaid Expenses
(b) Increase in Trade Payables
(c) Increase in Trade Receivables
(d) Decrease in Trade Receivables
Ans:- (c)
While calculating operating profit which will be added to net profit:
(a) Gain on Sale of Machinery
(b) Increase in General Reserves
(c) Interest Received on Investments
(d) Decrease in Trade Payables
Ans:- (b)
Dividend received is shown in Cash Flow Statement under
a) Operating Activities
b) Investing Activities
c) Financing Activities
d) None of these
Ans:- (b)
While calculating cash flow from operating activities which will be added:
(a) Increase in Inventory
(b) Increase in Creditors
(c) Decrease in Bills Payable
(d) Increase in Trade Receivables
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)
Cash from Operating Activities will decrease due to:
(a) Increase in Current Assets
(b) Decrease in Current Liabilities
(c) Neither of the two
(d) Both (a) and (b) above
Ans:- (d)
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)
Which of the following is incorrect about the statement of cash flows?
(a) It provides information about the cash receipt and cash payments of an enterprise
(b) It reconciles ending cash balance with the balance as per bank statement
(c) It provides information about the operating, investing and financing activities
(d) It explains the deviation of cash from Earnings.
Ans:- (b)
Dividend paid is shown as
a) Operating Activity
b) Investing Activity
c) Financing Activity
d) Cash and Cash Equivalent
Ans:- (c)
The statement of cash flows clarifies cash flows according to _ .
(a) Operating and non-operating flows
(b) Investing and non-operating flows
(c) Inflows and outflows
(d) Operating, investing and financing activities
Ans:- (d)
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)
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
Ans:- (c)
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 transactions will result in cash flows from operating activities?
(a) Cash receipts from sale of goods ₹ 94,000.
(b) Cash receipts from sale of investments ₹ 60,000
(c) Dividend received ₹ 31,000
(d) Payment of cash for purchase of fixed assets ₹ 3,00,000
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 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
Ans:- (d)
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)
An example of cash flow from investing activity is:
(a) Issue of debenture
(b) Repayment of long-term borrowings
(c) Purchase of raw materials for cash
(d) Sale of investment
Ans:- (d)
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)
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
Ans:- (c)
If a machine whose original cost is ₹ 1,00,000 having accumulated depreciation ₹ 30,000, is sold for ₹ 85,000, then while preparing Cash Flow Statement its effect on Cash Flow will be:
(a) Cash Flow from Operating Activities – ₹ 85,000
(b) Cash Flow from Financing Activities – ₹ 15,000
(c) Cash Flow from Investing Activities – ₹ 85,000
(d) Cash Flow from Financing Activities – ₹ 15,000
Ans:- (c)
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
Ans:- (a)
An example of Cash Flows from Financing Activity is:
(a) Credit Revenue from Operations
(b) Cash Receipts from Issue of Shares
(c) Sale of Investments
(d) Interest Received
Ans:- (b)
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)
If a machine whose original cost is ₹ 40,000 having accumulated depreciation ₹ 12,000, were sold for ₹ 34,000 then while preparing Cash Flow Statement its effect on cash flow will be:
(a) Cash flow from financing activities ₹ 34,000
(b) Cash flow from financing activities ₹ 6,000
(c) Cash flow from investing activities ₹ 34,000
(d) Cash flow from investing activities ₹ 6,000
Ans:- (c)
Sultan Chand & Sons (P) Ltd. is a educational publisher. The company purchased a machinery of ₹ 4,00,000 for the use in packing of books. Due to the purchase of machinery there will be:
(a) Cash Flow from Operating Activities
(b) Cash Used in Investing Activities
(c) Cash Flow from Financing Activities
(d) Cash Equivalents
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)
Issue of Debentures for Consideration other than Cash is shown as:
(a) Inflow of Cash under Financing Activities
(b) Outflow of Cash under Financing Activities
(c) Neither Inflow nor outflow of Cash
(d) Inflow of Cash under Operating Activities
Ans:- (c)
If the amount of goodwill is ₹ 40,000 at the beginning of a year and ₹ 48,000 at the end of that year then while preparing cash flow statement its effect on cash flow will be:
(a) Cash used (Payment) in Investing Activities ₹ 8,000
(b) Cash received from Operating activities ₹ 8,000
(c) Cash used (Payment) from Operating Activities ₹ 8,000
(d) Cash used (Payment) from Financial Activities ₹ 8,000
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)
How will you deal increase in the balance of ‘Securities Premium’ while preparing a Cash Flow Statement?
(a) Cash Flow from Operating Activities
(b) Cash Flow from Investing Activities
(c) Cash Flow from Financing Activities
(d) Cash Equivalent
Ans:- (c)
Which of the following is an example of Cash Flow from Operating Activities?
(a) Purchase of Machinery
(b) Issue of shares
(c) Purchase of Inventory for Cash
(d) Purchase of Investment
Ans:- (c)
Decrease in Bank Overdraft is shown under which heading in a Cash Flow Statement?
(a) Cash Flow from Operating Activities
(b) Cash Flow from Investing Activities
(c) Cash Flow from Financing Activities
(d) Cash Equivalent
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)
How will you treat payment of ‘Interest on Debentures’ while preparing a Cash Flow Statement?
(a) Cash Flow from Operarting Activities
(b) Cash Flow from Investing Activities
(c) Cash Flow from Financing Activities
(d) Cash Equivalent
Ans:- (c)
Interest paid on Debentures is
a) Operating Activity
b) Financing Activity
c) Investing Activity
d) Both Operating and Financing Activity
Ans:- (b)
Interest of ₹ 3,000 received in cash on Loans and advances will result in:
(a) cash inflow from Operating activities
(b) Cash inflow from investing activities
(c) Cash inflow from financing activities
(d) No change in cash or cash equivalents
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)
In case of a financial enterprise whose main business is lending and borrowing, ‘interest paid’ and ‘interest received’ are classified as:
(a) Operating activities
(b) Investing activities
(c) Financing activities
(d) Cash equivalents
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)
A company receives a dividend of ₹ 2 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
Ans:- (a)
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)
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
Ans:- (a)
Crox Ltd. purchased machinery of ₹ 25,00,000 issuing a cheque of ₹ 15,00,000 and 10% Debentures of ₹ 10,00,000. In the Cash Flow Statement, the transaction will be shown as:
(a) Outflow of Cash under Investing Activity ₹ 25,00,000, inflow of cash under Financing Activity as receipt for debentures ₹ 10,00,000.
(b) Outflow of Cash under Investing Activity ₹ 15,00,000
(c) Inflow of Cash ₹ 10,00,000 as Financing Activity
(d) None of the above
Ans:- (b)
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
Ans:- (a)
Buy-back of shares is an extraordinary item for
a) Operating Activities
b) Investing Activities
c) Financing Activities
d) Cash and Cash Equivalents
Ans:- (c)
A Mutual Fund Company receives a dividend of ₹ 20 Lakhs on its investments in another company’s shares. Where will it appear in a 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
Ans:- (a)
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)
Dividend paid by a finance 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
Ans:- (c)
Paid ₹ 5,00,000 to purchase shares of Suraksha Ltd. and received dividend of ₹ 50,000 after purchase. These transactions will result in
(a) Cash used in Investing Activities ₹ 5,00,000
(b) Cash generated from Financing Activities ₹ 5,50,000
(c) Cash Used in Investing Activities ₹ 4,50,000
(d) Cash generated from Financing Activities ₹ 4,50,000
Ans:- (c)
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
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)
Interest paid by an investment (finance) 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
(c) No Cash Flow
Ans:- (a)
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 item is not considered as Cash Equivalent?
(a) Short-term Deposits in Bank
(b) Commercial Papers
(c) Treasury Bills
(d) Investment
Ans:- (d)
Which of the following items is considered as Cash Equivalents?
(a) Marketable Securities
(b) Debtors
(c) Investment
(d) Bills of Exchange
Ans:- (a)
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
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)
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
Ans:- (c)
Which of the transactions will not result in flow of Cash?
I. Issue of Equity Shares of ₹ 20,00,000.
II. Purchase of machinery of ₹ 5,00,000
III. Redemption of Debentures of ₹ 10,00,000
IV. Cash deposited into bank ₹ 50,000.
(a) I & II
(b) II & III
(c) I & III
(d) Only IV
Ans:- (d)
Which of the following transaction does not result in ‘Inflow or outflow of cash and cash equivalents?
(a) Collection of cash from trade receivables
(b) Payment to trade payables
(c) Cash received on maturity of marketable securities
(d) Payment to employees
Ans:- (c)
Paid ₹ 7,00,000 to purchase shares 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)
| Asset | Purchased (₹) | Sold (₹) |
| Investments | 2,00,000 | 1,80,000 |
| Goodwill | 3,00,000 | — |
From the above information, ‘Cash flows from Investing activities’ will be
(a) Inflow ₹ 3,20,000;
(b) Outflow ₹ 3,20,000;
(c) Outflow ₹ 20,000
(d) Inflow ₹ 20,000
Ans:- (b)
Insurance Claim received by Albert Co. Ltd. of ₹ 5,00,000 for Loss of Machinery due to theft will be recorded in Cash Flow Statement in which of the following manner?
(a) Added under Operating Activities as Extraordinary Item and Subtracted from Operating Activities also.
(b) Subtracted under Operating Activities as Extraordinary Item and Added to Operating Activities also
(c) Added under Operating Activities as Extraordinary Item and Outflow under Investing Activity also
(d) Subtracted under Operating Activities as Extraordinary Item and Inflow under Investing Activities also
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)
Which of the following is not included in ‘Cash and Cash Equivalents’?
(a) Demand deposits with banks
(b) Short-term marketable securities
(c) Cheques in hand
(d) Trade receivables
Ans:- (d)
Which of the following transaction will result in inflow of cash?
(a) Cash withdrawn from bank ₹ 71,000.
(b) Issue of 9% debentures of ₹ 1,00,000 to the vendors of Machinery
(c) Received from debtors ₹ 74,000
(d) Redeemed 10% debentures by converting into equity shares.
Ans:- (c)
Cash deposited into Bank would result in
a) Cash Inflow
b) Cash Outflow
c) No Flow of Cash
d) May be Inflow or Outflow
Ans:- (c)
Angel Ltd., a stockbroker, purchased 5,000 shares of Tata Housing Ltd. It is
a) Operating Activity
b) Investing Activity
c) Financing Activity
d) General Activity
Ans:- (b)
Which of the following transaction will result in inflow of cash?
(a) Cash withdrawn from bank ₹ 71,000.
(b) Issue of 9% debentures of ₹ 1,00,000 to the vendors of Machinery
(c) Received from debtors ₹ 74,000
(d) Redeemed 10% debentures by converting into equity shares.
Ans:- (c)
Which of the following are included in ‘Cash’ for the purpose of preparing Cash Flow Statement?
(i) Cash in Hand
(ii) Marketable Securities
(iii) Demand deposits with banks
(iv) Trade Receivables
Choose the correct option from the following:
(a) (i) and (ii)
(b) (i) and (iii)
(c) (i) and (iv)
(d) (ii) and (iii)
Ans:- (b)
What will be the effect of issue of Bonus shares on Cash Flow Statement?
(a) No effect
(b) Inflow in Financing Activity
(c) Inflow in Operating Activity
(d) Inflow in Investing Activity
Ans:- (a)
What will be the effect of ‘Purchase of Marketable Securities for Cash’ on Cash Flow Statement?
(a) No effect
(b) Inflow from Financing Activities
(c) Outflow from Investing Activities
(d) Outflow from Financing Activities
Ans:- (a)
Issue of Debentures for consideration other than cash is shown under which activity?
(a) Operating Activity
(b) Investing Activity
(c) Financing Activity
(d) None of the above
Ans:- (d)
Aditya Sunrise Ltd. provides you the following information:
| Particulars | 31.3.2023 | 31.3.2022 |
| 10% Bank Loan | NIL | 1,00,000 |
Additional Information:
- Equity Share Capital raised during the year ₹ 3,00,000.
- 10% Bank Loan was repaid on 01.04.2022.
- Dividend received during the year was ₹ 20,000.
- Dividend Proposed for the year 2021-22 was ₹ 50,000 but only ₹ 20,000 was approved by the Shareholders.
Find out the cash flow from Financing Activities:
(a) ₹ 1,50,000
(b) ₹ 2,00,000
(c) ₹ 1,70,000
(d) ₹ 1,80,000
Ans:- (d)
Redemption of Debentures for cash would result in
a) Cash Inflow
b) Cash Outflow
c) No Flow of Cash
d) May be Inflow or Outflow
Ans:- (b)
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)
Prayas Ltd. made a profit of ₹ 1,75,000 after considering the following items:
(a) Goodwill written off ₹ 6,000
(b) Depreciation on Furniture ₹ 3,400
(c) Loss on sale of Building ₹ 89,000
(d) Gain on sale of Land ₹ 4,250
Operating Profit before Working Capital changes will be:
(a) ₹ 2,25,249
(b) ₹ 2,69,150
(c) ₹ 2,35,160
(d) ₹ 2,53,145
Ans:- (b)
Which of the following transactions are shown under financing activities while preparing cash flow statement:
(a) Issue of Equity Shares
(b) Cash received from Debtors
(c) Redemption of Debentures
(d) Interest received
Choose the correct option:
(a) (i)
(b) (i), (iii) and (iv)
(c) (i) and (iii)
(d) (i), (ii) and (iv)
Ans:- (c)
IDFC Bank Ltd. issued 1,00,000, 9% Debentures of ₹ 100 each for subscription. The issue was subscribed.
The amount of receipt will be shown as
a) Operating Activity
b) Investing Activity
c) Financing Activity
d) General Activity
Ans:- (c)
Which of the following transactions will result into ‘Flow of Cash’?
(a) Deposited ₹ 10,000 into bank.
(b) Withdrew cash from 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 shares.
Ans:- (c)
X Ltd. purchased furniture for ₹ 20,00,000 paying 60% by 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 result in no flow of cash:
(a) Cash withdrawn from the bank ₹ 7,000
(b) Issue of shares ₹ 20,00,000
(c) Purchase of investments ₹ 60,000
(d) Payment of wages ₹ 11,000
Ans:- (a)
Interest received on Debentures would result in
a) Cash Inflow
b) Cash Outflow
c) No Flow of Cash
d) May be Inflow or Outflow
Ans:- (a)
Which of the following activities are operating activities for the purpose of preparing ‘Cash Flow Statement’?
(i) Dividend and Interest received on securities
(ii) Payment of employee benefit expenses
(iii) Cash receipts from royalties and fees
(iv) Issue of shares against purchase of machinery
(a) (i), (ii) and (iii)
(b) (ii), (iii) and (iv)
(c) (i), (ii) and (iv)
(d) (ii) and (iii)
Ans:- (d)
An investment normally qualifies as a 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)
Old furniture written off would result in
a) Cash Inflow
b) Cash Outflow
c) No Flow of Cash
d) May be Inflow or Outflow
Ans:- (c)
Cash receipts from ‘Sale of machinery’ by a machinery dealer will be considered which type of activity from the following while preparing Cash Flow Statement?
(a) Investing Activity
(b) Operating Activity
(c) Financing Activity
(d) Both Investing and Financing Activity
Ans:- (b)
Interest received on Calls-in-Arrears by any company will be shown as
(a) Operating Activity
(b) Investing Activity
(c) Financing Activity
(d) General Activity
Ans:- (c)
Which of the following transactions will result into the flow of cash?
a) Cash is withdrawn from the 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 the bank.
Ans:- (c)
Sale of Patents of ₹ 50,00,000 will result in:
(a) Cash inflow of ₹ 50,00,000 from financing activities
(b) Cash outflow of ₹ 50,00,000 from financing activities
(c) Cash outflow of ₹ 50,00,000 from investing activities
(d) Cash inflow of ₹ 50,00,000 from investing activities
Ans:- (d)
Issue of Equity Shares against the purchase of machinery would result in
a) Cash Inflow
b) Cash Outflow
c) No Flow of Cash
d) May be Inflow or Outflow
Ans:- (c)
Kaveri Ltd. a financing company, took deposits 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
Ans:- (d)
The transaction ‘Capital Gains Tax paid on sale of fixed assets’ is classified under which of the following:
(a) Operating Activities
(b) Investing Activities
(c) Financing Activities
(d) Cash and Cash Equivalents
Ans:- (b)
Paid ₹ 5,00,000 to acquire shares in Neligare Industries and received a dividend of ₹ 30,000 after acquisition’. The transaction will result in
(a) Cash outflow from Financing Activities ₹ 4,70,000.
(b) Cash inflow from Investing Activities ₹ 4,70,000.
(c) Cash inflow from Financing Activities ₹ 4,70,000.
(d) Cash outflow from Investing Activities ₹ 4,70,00.
Ans:- (d)
Charging depreciation on furniture would result in
a) Cash Inflow
b) Cash Outflow
c) No Flow or Cash
d) May be Inflow to Outflow
Ans:- (c)
Which of the following transactions will not result into the 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)
A dividend received by a manufacturing company is classified as
a) Operating Activity