cash flow statement Mcqs with correct answer

Cash Flow Statement MCQs:

1. Cash flow statement is prepared for financial planning of
(A) Long range
(B) Medium range
(C) Short range
(D) Very Long range
Answer C

2. Which of the following is source of cash?
(A) Cash deposited into Bank
(B) Cash withdrawn from Bank
(C) Sale of Goods costing ₹10,000 for ₹8,000
(D) Sale of marketable securities for cash
Answer C

3. Which of the following is not source of cash?
(A) Issue of shares
(B) Purchase of Machinery
(C) Sale of Asset
(D) Dividend received
Answer B

4. 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
Answer C

5. Cash from operating activities consists of:
(A) Operating Profit
(B) Decrease/Increase in Current Assets
(C) Decrease/Increase in Current Assets
(D) All of the Above
Answer D

6. While calculating operating profit which will be added to net profit:
(A) Preliminary Expenses Written off
(B) Depreciation
(C) Loss on Sale of Asset
(D) All of the Above
Answer D

7. While calculating operating profit which will be added to net profit
(A) Profit on Sale of Asset
(B) Increase in General Reserves
(C) Interest received
(D) Refund of Tax

, Answer B

8. 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
Answer C

9. 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
Answer B

10. 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
Answer D

11. 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.
Answer B

12. 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
Answer D

13. 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
Answer C

14. An example of Cash Flow from Operating Activity is :
(A) Cash receipts from sale of goods and services
(B) Sale of long-term investments
(C) Interest Received
(D) Issue of Debentures
Answer A