Deck 6: Cash Flow Statement and Fund Flow Statement

Question 1

In case of other enterprises cash flow arising from interest paid should be classified as cash flow from ________ while dividends and interest received should be stated as cash flow from ____.

A)operating activities, financing activities
B)financing activities, investing activities
C)investing activities, operating activities
D)none of the above

Answer 1

financing activities, investing activities

Question 2

When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan element is classified under________.

A)operating activities, financing activities
B)financing activities, investing activities
C)investing activities, operating activities
D)none of the above

Answer 2

financing activities, investing activities

Question 3

Which of the following statements are false?

A)old furniture written off doesn't affect cash flow.
B)cash flow statement is a substitute for cash account.
C)appropriation of retained earnings is not shown in cash flow statement.
D)net cash flow during a period can never be negative.

Answer 3

cash flow statement is a substitute for cash account.

Question 4

Which of the following is not a cash outflow?

A)increase in prepaid expenses
B)increase in debtors
C)increase in stock
D)increase in creditors

Question 5

Cash flow statement is prepared for financial planning of

A)long range
B)medium range
C)short range
D)very long range

Question 6

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B)cash withdrawn from bank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

Question 7

Which of the following is not source of cash?

A)issue of shares
B)purchase of machinery
C)sale of asset
D)dividend received

Question 8

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

Question 9

If 6% Pref. share capital ?2,00,000 were redeemed at a premium of 5%, while preparing Cash Flow Statement its effect on cash flow will be :

A)cash used from financing activities ?2,12,000
B)cash received from financing activities ?2,12,000
C)cash used (payment) from financial activities ?2,10,000
D)cash used (payment) from financial activities ?2,00,000

Question 10

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

Question 11

How will you deal increase in the balance of 'Securities Premium Reserve' 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

Question 12

A Ltd., engaged in the business of retailing of two wheelers, invested ?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 13

How will you treat Bank Overdraft 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 14

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 15

How will you treat payment of 'Interest on Debentures' 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

Question 16

State whether cash deposited in bank 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

Question 17

A company has to prepare its balance sheet once in..

A)six months
B)two years
C)a year
D)as and when it needs

Question 18

Income statement of a business shows…

A)net profit
B)net operating result of specified period
C)net loss
D)none of these

Question 19

The statement which shows the periodical increase or decrease of funds is called___________ statement.

A)funds flow
B)cash flow
C)income
D)working capital

Question 20

Fund flow statement is based on the concept of…

A)business entity
B)accounting period
C)going concern
D)all of the above

Question 21

Funds means…

A)money
B)cash
C)machinery
D)any form of financial resources

Question 22

Which of the following is the component of current assets?

A)stock
B)prepaid expenses
C)income earned but not received
D)all of the above

Question 23

The term flow of funds refers to…

A)change in funds
B)change in working capital
C)both a & b
D)noneof the above

Question 24

Transaction between_________ may cause the flow of funds.

A)current assets and fixed assets
B)current assets and long term liabilities, and capital
C)current liabilities and fixed assets
D)all of the above

Question 25

The term current account refers to….

A)current assets
B)current liabilities
C)both a & b
D)none of the above