Cash Flow Statement CBSE Questions & Answers

Cash Flow Statement

This is Accountancy Class 12 Cash Flow Statement CBSE Questions & Answers. There are 15 questions in this test with each question having around four answer choices.

Questions & Answers

1
Is it correct that payment of salary to staff will be classified as operating activity for both finance and non-fiancé company.
  • A
    can’t say
  • B
    None of these
  • C
    No
  • D
    Yes
    Correct
2
Is payment for purchase of fixed assets will be classified as operating activity for both finance and non-fiancé company.
  • A
    No these are investing activities
    Correct
  • B
    Yes these are Operating activities
  • C
    No these are financing activities
  • D
    None
3
Why it is important to disclose the cash flow from investing activities separately
  • A
    Represents the extent to which the expenditure has been incurred to generate the future income
    Correct
  • B
    Indicate the extent to which operation of the enterprise have generated cash
  • C
    Useful in assessing claims on future cash flows by providers of funds to the enterprise
  • D
    None of these
4
Purchase of marketable security will result in __________
  • A
    None of these
  • B
    Cash outflow
  • C
    No flow of cash
    Correct
  • D
    Cash inflow
5
Cash flow arises when the net effect of a transaction _____ the amount of cash or cash equivalent
  • A
    None of these
  • B
    Only Increase
  • C
    Either increase or decrease
    Correct
  • D
    Only decrease
6
Following are the fictitious assets except
  • A
    Discount on issue of shares
  • B
    Loss on issue of debentures
  • C
    Issue of share capital
    Correct
  • D
    Share issue expenses
7
Which method is used when , a reconciliation between net income and the net Cash provided by operating activities must be provided.
  • A
    Direct method
    Correct
  • B
    None of these
  • C
    Indirect method
  • D
    Both
8
When there is a change in the balance of a non-current liability account or a capital stock account or cash dividends are paid, the related cash flow must be recorded in the
  • A
    Investment activities section
  • B
    None of these
  • C
    Operating activities section
  • D
    financing activities section
    Correct
9
Which of the following transactions would not create a cash flow?
  • A
    Amortization of a patent.
    Correct
  • B
    A company purchased some of its own stock from a stockholder.
  • C
    Sale of equipment at book value.
  • D
    Payment of a cash dividend.
10
Which of the following statements for the statement of cash flows is correct?
  • A
    Cash dividends paid are classified as cash flows from operating activities.
  • B
    A purchase of equipment is classified as a cash inflow from investing activities.
  • C
    A company with a net loss on the income statement will always have a net cash outflow from operating activities.
  • D
    Cash dividends received on stock investments are classified as cash flows from operating activities.
    Correct
11
Which of the following item is not added or deducted while preparing cash flow statement
  • A
    Purchase of goodwill
  • B
    Bonus share issued
    Correct
  • C
    Dividend received
  • D
    Dividend paid
12
Which of the following transactions would increase the net cash flow from operating activities
  • A
    The collection of an account receivable from a customer
    Correct
  • B
    The issuance of capital stock for cash at a price above par
  • C
    The purchase of delivery truck by issuing a note payable
  • D
    The sale of equipment for cash at a gain
13
For purpose of preparing cash flow statement , which of the following is not considered a ‘cash equivalent’
  • A
    Treasury Bills
  • B
    An investment in Bonds
    Correct
  • C
    Commercial paper
  • D
    Money market funds
14
Dividend received, Interest paid and Interest received are operating activity for which company
  • A
    Non-financial company
  • B
    Financial company
    Correct
  • C
    Both
  • D
    None
15
Conversion of debentures into equity shares will affect_______
  • A
    Operating activity
  • B
    Investing activity
  • C
    None of these
    Correct
  • D
    Financial activity