Chapter Name :- CASH FLOW STATEMENT

MULTIPLE CHOICE QUESTIONS

Q1 Cash from operation is equal to :

(a) Net Profit + Increase in Current Assets
(b) Net Profit + Decrease in Current Liabilities
(c) Operating Profit + Adjustment of Current Assets and Current Liabilities
(d) All of the above
Q2 Cash Flow Statement is related to:
(a) AS-3
(b) AS-6
(c) AS-9
(d) AS-12
Q3 Net Profit during the year ₹ 1,00,000
Debtors in the beginning the year of ₹ 30,000
Debtors at the end of the year ₹ 36,000
What is the amount of cash from operating activities ?
(a) ₹ 30,000
(b) ₹ 94,000
(c) ₹ 1,06,000
(d) ₹ 1,66,000
Q4 If a machine whose original cost is ₹40,000 having accumulated depreciation ₹12,000, were sold for
₹34,000 then while preparing Cash Flow Statement its effect on cash flow will be :
(A) Cash flow from financing activities ₹34,000
(B) Cash flow from financing activities ₹6,000
(C) Cash flow from investing activities ₹34,000
(D) Cash flow from investing activities ₹6,000
Q5 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
Q6 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
Q7 Cash deposit with the bank with a maturity date after two months belongs to which of the following
while preparing Cash Flow Statement?
a) Investing Activities
b) Financing Activities
c) Cash and Cash Equivalents
d) Operating Activities
Q8 If net profit is ₹ 35,000 after writing off good will ₹ 6,000 and loss on sale of furniture ₹ 1,000, cash
flow from operating activities will be :
(a) ₹ 35,000
(b) ₹ 42,000
(c) ₹ 29,000
(d) ₹ 28,000
Q9 Which activity comes under ‘Operating Activities’?
(a) Purchase of Land
(b) Issue of Debentures
(c) Proceeds from Issuance of Equity Shares
(d) Cash Sales
Q10 Net Profit during the year ₹ 50,000
Debtors in the beginning the year of ₹ 15,000
Debtors at the end of the year ₹ 18,000
What is the amount of cash from operating activities ?
(a) ₹ 15,000
(b) ₹47,000
(c) ₹ 53,000
(d) ₹ 83,000
Q11 Welspun India Ltd. has given you the following information: Machinery as on April 01, 2016 50,000 ;
Machinery as on March 31, 2017 60,000 ;
Accumulated Depreciation on April 01, 2016 25,000 ;
Accumulated Depreciation on March 31, 2017 15,000 ;
During the year, a Machine costing Rs. 25,000 with Accumulated Depreciation of Rs. 15,000 was sold
for Rs. 13,000.
Calculate cash flow from Investing Activities on the basis of the above information.
(a) 48000
(b) (48,000)
(c) 22,000
(d) (22,000)
Q12 Long-term Loans on 1st April, 2016 Rs. 2,00,000 ;
Long-term Loans on 31st March, 2017 Rs.2,50,000 ;
During the year, the company repaid a loan of Rs. 1,10,000.
Loan obtained during the year......................
(a) 50,000
(b) 1,60,000
(c) (1,60,000)
(d) None of the above
Q13 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
Q14 If a machine whose original cost is ₹40,000 having accumulated depreciation ₹12,000, were sold for
₹34,000 then while preparing Cash Flow Statement its effect on cash flow will be :
(a) Cash flow from financing activities ₹34,000
(b) Cash flow from financing activities ₹6,000
(c) Cash flow from investing activities ₹34,000
(d) Cash flow from investing activities ₹6,000
Q15 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
Q16 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
Q17 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
Q18 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
Q19 6. 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.
 (a) A, B, C
(b) B, C, D
(c)C, D, A
(d) All are true

Q20 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
Q21 Cash deposit with the bank with a maturity date after two months belongs to which of the following
while preparing cash flow statement?
(A) Investing activities
(B) Financing activities
(C) Cash and cash equivalents
(D) Operating activities
Q22 Computer software comes under:
(A) Fixed tangible assets
(B) Fixed intangible assets
(C) Current liabilities
(D) Long term borrowings
Q23 Rent received is classified under:
(A) Operating activities
(B) Investing activities
(C) Financing activities
(D) Cash and cash equivalents
Q24 Dividend paid by a finance company is classified under which of the following, while preparing cash
flow statement?
(A) Operating Activities
(B) Investing activities
(C) Financing activities
(D) Cash and cash equivalents
Find out cash flows from from investing activities:
Q25 A mutual fund company invested Rs. 3000000in share, and Rs. 1500000 in Debentures. It received Rs.
300000 as dividend and interest.
(A) Rs. 4800000 inflow
(B) Rs. 4200000 outflow
(C) Rs. 300000 inflow
(D) Rs. NIL
Q26 9% Debenture issued to vendor for the purchase of a Machinery of Rs. 50000, will result in:
(A) Inflow
(B) Outflow
(C) Both A and B
(D) No flow
Q27 Issue of Debenture Rs. 500000 will be shown under:
(A) Investing activity
 (B) Operating activity
(C) Financing activity
(D) Cash and cash equivalent
Q28 Which of the following item is not considered under cash and cash equivalent?
(A) Current investments
(B) Marketable securities
(C) Drafts on hand
(D) Loose tools
Q29 Calculate change in working capital, from the following information:
Increase in Bills payable Rs. 20000, decrease in Creditors Rs. 5000
(A) Rs. 15000 negative
(B) Rs. 15000 positive
(C) Rs. 25000 positive
(D) Rs. 25000 negative
Q30 Where will you show goodwill written off?
(A) Operating activity
(B) Investing activity
(C) Financing activity
(D) Cash and cash equivalent
Q31 Statement of cash flows includes
A) Financing Activities
B) Operating Activities
C) Investing Activities
D) All of the Above

Q32 The statement of cash flow clarifies cash flows according to

A) Operating and Non-operating Flows
B) Inflow and Outflow
C) Investing and Non-operating Flows
D) Operating, Investing, and Financing Activities

Q33 Cash flow example from a financing activity is

A) Payment of Dividends
B) Receipt of Dividend on Investment
C) Cash Received from Customers
D) Purchase of Fixed Asset

Q34 Cash flow example from an investing activity is

A) Issue of Debenture
 B) Repayment of Long-term Loan
C) Purchase of Raw Materials for Cash
D) Sale of Investment by Non-Financial Enterprise

Q35 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

Q36 A company that issues stocks and bonds to raise funds results in
A) Decrease in Cash
B) Increase in Cash
C) Increase in Equity
D) Increase in Liabilities

Q37 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
Q38 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
Q39 . 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
Q40 While calculating operating profit before working capital changes, 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
Q41 Which of the following is not considered as cash equivalents?
A) Bank Overdraft
B) Commercial Paper
C) Treasury Bills
D) All of these
Q42 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
Q43 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
Q44 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
Q45 Operating profit of the year is Rs.2,00,000. During the year, there was increase in inventory by Rs.
9,00,000 and decrease in trade receivable of Rs.50,000. What is the amount of cash flow from
operations?
A) Rs. 60,000/-
B) Rs. 1,60,000/-
C) Rs. 2,40,000/-
D) Rs. 3,40,000/-
Q46 Which of the following transitions will result into flow of cash:?
 A) Cash withdrawn form bank Rs. 20,000
B) Issued Rs, 20,000, 9% debentures for the vendors of machinery.
C) Received 19,000 from debtors
D) Deposited cheques of Rs. 10,000 into bank

Q47 ABC Ltd had investment of Rs 68,000 as on 31.3.2013 and investment of Rs 56,000 as on 31.3.2019.
During the year ABC Ltd sold 40% of its investments being held in the beginning of period at a profit
of Rs 16,800. Determine cash flow from investing activities.
A) Rs 59,200
B) Rs 28,800
C) Rs 72,800
D) None of the above
Q48 In a statement of cash flows, a company investing in short-term financial investments and in fixed
assets results in:

A) increased cash
B) decreased cash
C) increased liabilities
D) increased equity
Q49 Which of the following is considered to be as cash equivalent?
A) Marketable securities
B) Debtors
C) Investment
D) Bill of exchange
Q50 A company who issues bonds or stocks in result raised funds which finally:
A. increases liabilities
B. increases equity
C increases cash
D . decreases cash
Q51 Interest received by other than financial enterprise is shown in Cash Flow Statement under
A. Operating Activities.
B. Investing Activities.
C. Financing Activities.
D. General Activities
Q52 Interest received by financial enterprise is shown in Cash Flow Statement under
A. Operating Activities.
B. Investing Activities.
C. Financing Activities.
 D. General Activities
Q53 Payment of Income Tax is shown as
A. Operating Activities.
B. Investing Activities.
C. Financing Activities.
D. General Activities
Q54 Dividend paid by a financial company is shown as cash outflow under ( APPLICATION)
A. Operating Activities.
B. Investing Activities.
C. Financing Activities.
D. General Activities
Q55 Dividend paid by a non-financial company is shown as
A. Operating Activities.
B. Investing Activities.
C. Financing Activities.
D. General Activities.

Q56 Which of the following is shown under Financing Activity?

A. Interest paid.
B. Commission Received.
C. Cash received against sale of goods.
D. Cash paid for purchase of goods
Q57 Which of the following is not included in Cash and Cash Equivalents?
A. Balance with Banks.
B. Debentures purchased maturing after 100 days of purchase.
C. Cheques and Drafts on hand.
D. Cash on Hand.

Q58 Which of the following is not a part of Cash and Cash Equivalents?
A. Inventories.
B. Current Investments.
C. Short-term Deposits.
D. Marketable Securities
Q59 Which of the following is not added as Non-Cash Expense?
A. Goodwill amortized.
B. Depreciation.
C. Interest on debentures paid.
D. All of these
Q60 XY Ltd. Has balance in Provision for Tax Account of Rs 1,00,000 and Rs 1,50,000 as on 31 st March,
2019 and 2020 respectively. It made a provision for tax during the year of Rs 1,30,000. The amount of
tax paid during the year was
A. Rs 1,00,000
B. Rs 1,20,000
C. Rs 80,000
D. Rs 1,50,000
 ANSWER KEYS

MCQ ANSWER KEYS

Q
Q.NO ANSWER Q.NO ANSWER NO ANSWER
1 B 21 C 41 A
2 B 22 B 42 C
3 B 23 B 43 D
4 C 24 C 44 A
5 C 25 D 45 B
6 A 26 D 46 C
7 C 27 C 47 B
8 B 28 D 48 B
9 D 29 B 49 A
10 B 30 A 50 C
11 D 31 D 51 B
12 B 32 B 52 A
13 C 33 A 53 A
14 C 34 D 54 C
15 A 35 C 55 C
16 C 36 B 56 A
17 C 37 D 57 B
18 B 38 C 58 A
19 B 39 D 59 C
20 D 40 D 60 C