Table of Contents
NCERT MCQ ON Cash Flow Statement:
Question1: Sale of Copyrights is concerned with_______
- a) Investing Activities
- b) Operating Activities
- c) Both Operating Activities and Financing Activities
- d) Financing Activities
Answer: Investing Activities
Question2: Dividend Received is concerned with_________
- a) Investing Activities
- b) Operating Activities
- c) Financing Activities
- d) Both Operating Activities and Financing Activities
Answer: Investing Activities
Question3: 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
Question4: Rent received is classified under
- a) Investing Activities
- b) Operating Activities
- c) Cash and Cash Equivalents
- d) Financing Activities
Answer: Investing Activities
Question5: 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: Net income figure from the income statement
Question6: 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: Cash Flow from Financing Activities and Cash flow from Investment activities
Question7: 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: Cash flow from operating activities
Question8: 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: Both Direct and Indirect
Question9: How many methods for the preparation of cash flow statement
- a) 2
- b) 3
- c) 4
- d) 5
Answer: 2
Question10: 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: Liquidity position of the organisation
Question11: 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: All of the options
Question12: 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: All of the options
Question13: 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: Cash outflow
Question14: 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: Cash inflow
Question15: 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: Firm and its investors
Question16: Cash flows from investing activities are those
- a) All of the options
- b) Property
- c) Plant
- d) Intangible assets.
Answer: All of the options
Question17: 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: All of the options
Question18: 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: Cash Flow from Operating Activities
Question19: 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: Cash Flow
Question20: A cash flow statement shows
- a) Both Inflow and Outflow
- b) Inflow cash
- c) Outflow cash
- d) Not related to cash
Answer: Both Inflow and Outflow
Question21: 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: Added to
Question22: 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: Added to
Question23: 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: Deducted from
Question24: 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: Rs. 60,000
Question25: 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: Rs. 40,000
Question26: 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: Rs. 95000
Question27: 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: Rs. 16000
Question28: 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: Rs. 22000
Question29: 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: Rs. 187000
Question30: 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: Depreciation
Question31: 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: Rs. 120000
Question32: 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: Decrease in stock
Question33: Cash flow statement is prepared from
- a) All of the options
- b) Balance sheet
- c) Profit and Loss
- d) Additional Information
Answer: All of the options
Question34: 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: Increase in Current assets
Question35: 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: Decrease in cash
Question36: 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: Increase in outstanding Exp.
Question37: 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: Purchase of fixed assets
Question38: 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: Non Cash
Question39: According to AS-3 (Revised) redemption of preference share is _______ activity
- a) Financing
- b) Investing
- c) Operating
- d) All of the options
Answer: Financing
Question40: Marketable securities is treated as ___________ in cash flow statement
- a) Cash equivalent
- b) Non Cash equivalent
- c) Both
- d) All of the options
Answer: Cash equivalent
Question41: 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
Question42: 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:43 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
Question44: 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
Question45: 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
Question46: 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
Question47: Which of the following item is considered as Cash Equivalents?
a) Marketable Securities
b) Debtors
c) Investment
d) Bills of Exchange
Answer: A
Question48: 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
Question49: 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
Question50: 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
Question51: 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
Question52: 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
Question53: ‘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
Question54: 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
Question55: 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
Question56: According to AS-3 (Revised) purchase of fixed assets is
- a) Investing
- b) Operating
- c) Financing
- d) All of the options
Answer: Investing
Question57: 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: Cash Basis
Question58: Increase in stock results in _____________ of cash
- a) Outflow cash
- b) Inflow cash
- c) No change in cash
- d) All of the options
Answer: Outflow cash
Question59: Increase in creditors results in _____________ of cash
- a) Inflow cash
- b) Outflow cash
- c) No change in cash
- d) All of the options
Answer: Inflow cash
Question60: Refund of income tax is a __________
- a) Inflow cash
- b) Outflow cash
- c) No change in cash
- d) All of the options
Answer: Inflow cash
Question61: 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: On Cash basis
Question62: 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: All of the options
Question63: 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: Cash Flow from Financing Activities
Question64: Cash flow statement is useful for
- a) Short Term financial analysis
- b) Long Term financial analysis
- c) 10 Years
- d) 5 Years
Answer: Short Term financial analysis
Question65: 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: Current Assets and Current Liabilities
Question66: 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: Operating Activity
Question67: Which of the following is not a source of finance
- a) Fixed Assets
- b) Debentures
- c) Bank Overdraft
- d) Bank Loan
Answer: Fixed Assets
Question68: Purchase of office equipment will affect
- a) Investing Activities
- b) Operating Activities
- c) Financing Activities
- d) Both Operating and Financing Activities
Answer: Investing Activities
Question69: 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: Investing activities
Question70: Decrease in value of Patents
- a) Add (operating activities)
- b) Less (operating activities)
- c) Add (Investing activities)
- d) Add (Financing activities)
Answer: Add (operating activities)
Question71: 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: Deducted in investing activities
Question72: Loss on sale of furniture will be
- a) Add (operating activities)
- b) Less (Investing activities)
- c) Less (operating activities)
- d) Add (Investing activities)
Answer: Add (operating activities)
Question73: 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: Cash and Cash Equivalents
Question74: 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: All of these
Question75: 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: All of the options
Question76: 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: Add in operating activities
Question77: 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: Increase in Bank Overdraft
Question78: 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: Outflow
Question79: 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: Issue of Equity shares
Question80: 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: Interest received on calls in arrear
Question81: Dividend paid by a finance company comes under_______
- a) Operating Activities
- b) Investing Activities
- c) Manufacturing Activity
- d) Financing Activity
Answer: Operating Activities
Question82: 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: Received by a finance company
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