Top 250+ Solved Analysis of Financial Statements MCQ Questions Answer
Q. Cash flow example from an 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
Q. Which item comes under financial activities in cash flow?
a. redemption of preference share
b. issue of preference share
c. interest paid
d. all the above
Q. As per Accounting Standard-3, Cash Flow is classified into
a. operating activities and investing activities
b. investing activities and financing activities
c. operating activities and financing activities
d. operating activities, financing activities and investing activities
Q. Cash Flow Statement is also known as
a. statement of changes in financial position on cash basis
b. statement accounting for variation in cash
c. both a and b
d. none of the above.
Q. The objectives of Cash Flow Statement are
a. analysis of cash position
b. short-term cash planning
c. evaluation of liquidity
d. comparison of operating performance
Q. Cash Flow Statement is based upon
a. cash basis of accounting
b. accrual basis of accounting
c. credit basis of accounting
d. none of the above
Q. Which of the following statements are true?
a. cash flow reveals only the inflow of cash
b. cash flow reveals only the outflow of cash
c. cash flow is a substitute for income statement
d. cash flow statement is not a replacement of funds flow statement.
Q. 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
Q. When a fixed asset is bought as hire purchase, interest element is classified under ______ and loanelement is classified under________.
a. operating activities, financing activities
b. financing activities, investing activities
c. investing activities, operating activities
d. none of the above
Q. 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.
Q. 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
Q. Cash flow statement is prepared for financial planning of
a. long range
b. medium range
c. short range
d. very long range
Q. Which of the following is not source of cash?
a. issue of shares
b. purchase of machinery
c. sale of asset
d. dividend received
Q. 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
Q. How will you deal increase in the balance of ‘Securities Premium Reserve’ while preparing a Cash FlowStatement?
a. cash flow from operating activities
b. cash flow from investing activities
c. cash flow from financing activities
d. cash equivalent