MCQ Class 12 Accountancy Chapter 6 Cash Flow Statement

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Cash Flow Statement Class 12 Accountancy MCQs Questions with Answers

Refer below for MCQ Class 12 Accountancy Chapter 6 Cash Flow Statement with solutions. Solve questions and compare with the answers provided below

Question: 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

Question: How many methods for the preparation of cash flow statement
(a) 2
(b) 3
(c) 4
(d) 5

Question: Principal revenue generating activities of an enterprise are called as
(a) Operating activities
(b) Financing activities
(c) Investing activities
(d) All of the options

Question: 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

Question: A decrease in the current asset account Prepaid Insurance.
(a) Operating Activity
(b) Investing Activity
(c) Financing Activity
(d) Supplemental Activity

Question: 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

Question: 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

Ques. 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

Ques. 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.

Question: The statement of cash flows is designed with the purpose of helping users to assess each of the following, except
(a) The profitability of the entity
(b) The major sources of cash receipts during the period
(c) The reasons why net cash flows from operating activities differ from net income
(d) The ability of a entity to remain liquid

Question: 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

Question: A company who issues bonds or stocks in result raised funds which finally
(a) Increases cash
(b) Decreased cash
(c) Increased liabilities
(d) Increased equity

Question: Which of the following is not a source of finance
(a) Fixed Assets
(b) Debentures
(c) Bank Overdraft
(d) Bank Loan

Question: 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

Question: For the calculation of cash flow from operating activities, payments and receipts shown in Profit & Loss account are converted into payments and receipts actually in cash by eliminating
(a) Non-cash revenue from the revenue earned and Non-cash expenses from expenses incurred
(b) Non-cash revenue from the revenue earned
(c) Non-cash expenses from expenses incurred
(d) None of the options

Question: Which of the following transactions would not create a cash flow
(a) Amortization of a patent.
(b) Payment of dividend.
(c) Sale of office equipment at book value.
(d) Goods purchased in cash

Question: Which of the following is not a cash inflow
(a) Decrease in creditors
(b) Decrease in debtors
(c) Issue of shares
(d) Sale of fixed assets

Ques. 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

Question: Sale of Copyrights is concerned with_______
(a) Investing Activities
(b) Operating Activities
(c) Both Operating Activities and Financing Activities
(d) Financing Activities

Question: Dividend Received is concerned with_________
(a) Operating Activities
(b) Financing Activities
(c) Investing Activities
(d Both Operating Activities and Financing Activities 

Question: In indirect method, Which is used to calculate the amount of net cash flow from operating activities
(a) Net loss figure from Profit & Loss
(b Net Profit figure from Profit & Loss
(c) All of the options 
(d) Net income figure from the income statement

Question: 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 

Question: 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 

Question: Which is the Method for the preparation of cash flow statement
(a) Direct Method
(b) Both Direct and Indirect
(c) Indirect Method
(d) Average Method 

Question: 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

Question: Rent received is classified under
(a) Investing Activities
(b) Operating Activities
(c) Cash and Cash Equivalents
(d) Financing Activities 

Question: How many methods for the preparation of cash flow statement
(a) 3
(b) 4
(c) 2
(d) 5 

Question: 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 

Question: 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 

Question: 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

Question: When Company repurchases shares, pays dividends or pays off debt, it records a
(a) Cash inflow
(b) Not related to cash
(c) Cash outflow
(d) All of the options 

Question: Cash flows from investing activities are those
(a) All of the options
(b) Property
(c) Plant
(d) Intangible assets.

Question: 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 

Question: The cash flow statement begins with the

(a) Cash Flow from Financing Activities
(b) Cash Flow from Operating Activities
(c) Cash Flow from Investing Activities
(d) None of these

Question: 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

Question: 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

Question: 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

Question: 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. 40,000
(b) Rs. 70,000
(c) Rs. 50000
(d) Rs. 60,000

Question: 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 

Question: 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 

Question: The primary objective of cash flow statement is to provide useful information about

(a) Net Profit
(b) Cash Flow
(c) Net Loss 
(d) All of the options

Question: A cash flow statement shows
(a) Both Inflow and Outflow
(b) Inflow cash
(c) Outflow cash
(d) Not related to cash

Question: For calculating cash flow from operating activities, provision for doubtful debts is __________the profit made during the year
(a) Deducted from
(b Divided to
(c) Added to
(d) All of the options 

Question: 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

Question: 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

Question: 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

Question: 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. 40,000
(b) Rs. 70,000
(c) Rs. 60,000
(d) Rs. 50000

Question: 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 

Question: 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. 42000
(b) Rs. 28000
(c) Rs. 30000
(d) Rs. 22000 

Question: 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 

Question: Acquisition and disposal of long term assets is included in
(a) Cash flow from investing activities
(b) Cash flow from financing activities
(c) Cash flow from operating activities
(d) All of the options

Question: Is payment for purchase of fixed assets will be classified as operating activity for both finance and non finance company
(a) No its investing activities
(b) No Its financing activities
(c) Not to be recorded
(d) All of the options

Ques. A Ltd., engaged in the business of retailing of two wheelers, invested Rs. 50,00,000 in the shares of a manufacturing company. Dividend received on this investment will be :
(a) Cash Flow from Operating Activities
(b) Cash Flow from Investing Activities
(c) Cash Flow from Financing Activities
(d) Cash Equivalent

Question: The various activities operating, investing and financing classified as per ___related to cash flow statement
(a) AS 3 (revised)
(b) AS 4 (revised)
(c) AS 5 (revised)
(d) AS 6 (revised)

Question: Which of the following are cash flow from operating activities
(a) Cash Receipts from customers and Cash Paid to Supplier and Employees
(b) Cash Receipts from customers
(c) Cash Paid to Supplier and Employees
(d) None of the options

Question: Which is the cash equivalents
(a) All of the options
(b) Convertible into cash within three months.
(c) Highly liquid and capable of paying debts.
(d) Easily convertible into cash and risk-free.

Ques. Where will you show purchase of Goodwill 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

Question: Which of the following are cash flow from investing activities
(a) All of the options
(b) Interest received
(c) Dividend received
(d) Sale of fixed assets

Question: Cash Inflows from Investing Activities are
(a) All of the options
(b) Cash receipt from disposal of fixed assets
(c) Interest received in cash from loans and advances
(d) Dividend received from investments in other enterprises

Ques. Mention the net amount of‘Source’ or ‘Use’ of cash when a fixed asset having book value of Rs. 15,000 is sold at a loss of Rs. 5,000.
(a) Use Rs.5,000
(b) Source Rs. 10,000
(c) Use 115,000
(d) Source 115,000

Ques. Dividend received by financial enterprise is shown in Cash Flow Statement under
(a) Operating Activities.
(b) Investing Activities.
(c) Financing Activities.
(d) General Activities.

Ques. Dividend paid by a non-financial company is shown as
(a) Operating Activity.
(b) Investing Activity.
(c) Financing Activity.
(d) Cash and Cash Equivalent.

Question. From the following information, the outflow of cash for the purchase of machinery will be:
Written down value of machinery as on 1.4.2011 – Rs 5,00,000
Written down value of machinery as on 31.3.2012 -Rs7,00,000
Depreciation on machinery charged during the year Rs 60,000
Machinery having book value Rs 25,000 sold for Rs 20,000
(a) Rs 2,70,000
(b) Rs 2,80,000
(c) Rs 2,75,000
(d) Rs 2,85,000

Question. From the following information find the cash generated from operations:
Operating Profit before working capital changes 1,00,000
Depreciation on fixed assets 15,000
Loss on sale of Furniture 5,000
Interest paid 13,000
Dividend received
Increase in debtors 8,000
Decrease in stock 7,000
Increase in creditors 4,000
(a) Rs 1,18,000
(b) Rs 1,24,000
(c) Rs 1,03,000
(d) Rs 1,00,000

Question.Bank Overdraft and cash credit are to be treated as:
(a) Cash Equivalents
(b) Non Current Liabilities
(c) Investing Activity
(d) Short Term Borrowings

Question. Which of the following transactions would result inflow of cash:
(a) Cash withdrawn from Bank for office use.
(b) Purchase of machinery worth Rs 2,00,000 and issued shares in consideration thereof.
(c) Sale of furniture for Rs 3,000 to Mr. Mohan.
(d) Cash received from Debtors Rs 6,000

Question. Which of the following transactions would not create a cash flow ?
(a) A company purchased some of its own stock from a stockholder
(b) Amortization of a patent
(c) Payment of a Cash Dividend
(d) Sale of equipment at book value

Question. From the following particulars, what will be the amount of provision for tax made during the year?
Provision for Taxation
31.3.2011 50,000
31.3.2012 40,000
The Company paid taxes Rs 45,000 for the year 2011-2012.
(a) Rs 45,000
(b) Rs 35,000
(c) Rs 40,000
(d) Rs 50,000

Question.From the following information find out the inflow of cash
Office Equipment `
31st March, 2014 60,000
31st March, 2013 1,00,000
` Additional Information:
Depreciation for the year 2013-14 is Rs 7,000, Purchase of office Equipment during the year Rs 10,000 Part of Office Equipment sold at a profit of Rs 6,000
(a) Rs 48,000
(b) Rs 49,000
(c) Rs 44,000
(d) Rs 33,000

Question. Gain on sale of tangible non current asset is an
(a) Operating activity
(b) Investing activity
(c) Financing activity
(d) Cash and Cash Equivalents

Question. From the following information find out the cash flow from financing activities.
Liabilities
Proposed Dividend
31st March 2013 20,000
31st March 2014 15,000
Additional Information: Equity Share Capital raised 3,00,000 10% Debentures Redeemed 1,00,000 Preference Share capital Redeemed 50,000. Interim Dividend paid during the year 20,000
(a) Rs 1,25,000
(b) Rs 1,00,000
(c) Rs1,50,000
(d) Rs 1,30,000

Question.From the following information find out the inflow of cash
31st March, 2015 31st March, 2014
Plant and Machinery Account ` Rs6,00,000 Rs 4,50,000
Accumulated Depreciation ` Rs1,60,000 Rs 1,00,000
Additional Information: Depreciation for the year 2014‐15 is Rs 80,000. During the year Machinery was Purchased for Rs 2,50,000 and a part of asset was sold at a profit of Rs 40,000.
(a) Rs 1,20,000;
(b) Rs 1,00,000;
(c) Rs 80,000;
(d) Rs40000

Question.Which of the following transactions would result in neither cash inflow nor outflow of cash and cash equivalents.
(a) Issue of share capital
(b) Issue of bonus shares
(c) redemption of debentures
(d)Trade recievable realize(d)

Question. Gain on sale of tangible current asset is an
(a) Operating activity
(b) Investing activity
(c) Financing activity
(d) Cash and Cash Equivalents

Question. A decrease in outstanding expense would result in
(a) Decrease in cash balance
(b) Increase in cash balance
(c) Unaltered
(d) Would change the current liabilities.

Question. Expenses paid in advance at the end of the year are i…….in ……ii activities while preparing cash flow statement
(a) Added,Operating
(b) Subtracted,Operating
(c) Added,Investing
(d) Subtracted,Investing

Question. Which of the following shall be considered as an outflow of cash in cash flow statement.
(a) Decrease in Public Deposits
(b) Issue of share capital
(c) Increase in accounts payable
(d) Decrease in accounts receivables.

Question. Pick the odd one out
(a) Long term borrowings
(b) Reserves and surplus
(c) Share capital
(d) Public deposits.

Fill in the Blanks

Question.Patents purchased and completely amortized in the year of purchase is added under_____ ________and shown as an outflow under______.

Question. Loss on issue of debentures written off is shown by way of deduction from_________________ of the debentures. 

Question.Purchase of securities by a non- finance company is.   

Question.The basis of Cash Flow Statement is . 

Question.Debentures issued for consideration other than cash are not shown in the Cash Flow Statement because ______________is not received against the issue. 

State True of False

Question.Buy Back of shares is an extraordinary item for Financing activity. 

Question.Issue of Bonus shares is shown as a financing activity.

Question.Gratuity paid to a retiring employee is an Operating activity.   

Question.Shares issued to promoters in consideration of their services are shown as a financing activity.   

 

Question.Operating activities are principal revenue producing activities of an enterprise and those activities that are not investing or financing activities.   

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