UnitName ChapterName SectionName

Cash Flow Statement Cash Flow Statement Cash Flow Statement

 Questions A B
supplements the P & L is independent of
Cash flow statement provides information that
A/c and Balance sheet. financial statements
Cash received from sale of machinery is treated as cash
Operating activities Financing activities
inflow from
One of the following is not treated as cash equivalent Certificate of deposits Public deposits
Cash flow from financing Cash flow from
Unrealised gains & Losses arising in foreign exchange are
activities investing activities
Payment relating to capitalised R & D cost is a cash flow
Operating activities Financing activities
from
Conversion of
One of the following is considered as cash transaction. Debentures into Equity Call bonus
shares
Companies with a
AS 3 is mandatory for Listed companies turnover exceeding ` 50
crores

Securities premium collected amounts to cash flow from Operating activities Investing activities
Issue of debentures is a cash flow from Operating activities Investing activities
Redemption of debentures is a cash flow from Operating activities Investing activities
Increases cash flow from Decreases cash flow
Decrease in debtors
Operating activities from financing activities

Decreases flow from Increases cash flow

Decrease in Current Liabilities
operating activities from operating activities
Dividend paid causes cash flow from Operating activities Financing activities
Interest received causes cash flow from Operating activities Financing activities
Proceeds from earthquake disaster settlement is a cash
Operating activities Investing activities
flow from
Repayment of lease Liabilities is a cash flow from Operating activities Investing activities
Loans to subsidiaries is a cash flow from Operating activities Investing activities
Income tax payment is a cash flow from. Operating activities financing activities
Refer to Q. No. 19 the use of cash for investing activities
` 60,000 ` 2,16,000
will be,
Refer to Q. No. 21 cash flow used for investing activities
` 2,50,000 ` 3,05,000
will be
Money market
For cash flow statement cash equivalent includes Bank deposits for 21 days
instruments
Acquisition of a long term investment is a Investing activity Financing activity
Acquisition of a subsidiary is Investing activity Financing activity
Income tax Refund is a Investing activity Operating activity
Cash sales is Financing activity Operating activity
Collection from debtors is Financing activity Investing activity
Interim dividend paid is Operating activity Investing activity
Brokerage paid on issue of shares is Investing activity Financing activity
Interest paid on long term borrowing is Financing activity Investing activity
Dividend received on shares held is Investing activity Financing activity
Proceeds from sale of patents is Financing activity Investing activity
Sale of fixed assets is a Investing activity Financing activity
Depreciation on assets is Added back to profit Deducted from profit
Payment of underwriting commission is Operating activity Investing activity
Increase in share capital due to issue of shares for cash
Financing activities Investing activities
increases cash flow from
Issue of shares against conversion of Debentures increases
Investing activities Financing activities
cash flow from
Redemption of debentures is a cash flow from Investing activities Financing activities
Payment of interim dividend is use of cash in Financing activities Operating activities
Increase in Patents is a cash used in Operating activities Investing activities
Discount on Debentures is added back to current years
Financing activities Operating activities
profit to find out cash from
Cash from business operations can be determined from
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income statement.
Working capital from business operations can be
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determined from P & L A/c .
Sources of cash should always be more than uses of cash
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in the cash flow statement.
Interest on debenture is a part of cash flow from operating
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activities.
Interest on deposits in bank is put under investing
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activities.
Sources of cash must be equal to uses of cash. 0:00 0:00
Revaluation of building affects cash flow. 0:00 0:00
Sale of machinery is a source of cash from financing
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activities.
Cash flow statement is mandatory for all the firms. 0:00 0:00
Cash flow statement is prepared as per As 3. 0:00 0:00
Issue of share capital creates cash flow from financing
0:00 0:00
activities.
In cash flow statement cash balance at the beginning and
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at the end of the year are shown separately.
Change in current assets is adjusted in cash flow from
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operating activities.
Increase in current liabilities is adjusted in cash flow from
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operation.
Redemption of debenture creates a cash flow from
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financing activities.
Redemption of pref. shares creates cash flow from
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financing activities.
These is only one direct method for determination of cash
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flow from operating activities.
Income tax paid is adjusted in cash flow from operating
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activities.
Refund of public deposits is an application of cash. 0:00 0:00
Depreciation creates a cash flow. 0:00 0:00
Purchase of vehicles is an application of cash from
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investing activities.
 C D E F Answer
provides basis for financial
of a cash budget a
planning
Extra-ordinary
Investing activates c
activities.
Commercial paper Treasury bill b
Not treated as cash flows None of the above. c

Investing activities None of the above c

Issue of shares for purchase Purchase of machinery

b
of machinery by issue of Debentures.

as in (a) & (b) None of the above c

Financing activities None of the above c

Financing activities Non of the above c
Financing activities None of the above c
Decreases cash flow from
None of the above a
investing activities

Increases cash flow from

None of the above a
financing activities
Investing activities None of the above b
Investing activities None of the above c
financing activities None of the above a
Financing activities None of the above c
Financing activities None of the above b
Investing activities None of the above a
` 2,20,000 ` 1,15,000 b

` 3,55,000 ` 3,80,000 c

Treasury Bills All of the above d

Operating activity None of the above a
Operating activity None of the above a
Financing activity None of the above b
Investing activity None of the above b
Operating activity None of the above c
Financing activity None of the above c
Operating activity None of the above b
Operating activity None of the above a
Operating activity None of the above a
Operating activity None of the above b
Operating activity None of the above a
Ignored None of the above a
Financing activity None of the above c
Operating activities None of the above a

Operating activities None of the above d

Operating activities None of the above b
Investing activities None of the above a
Financing activities None of the above b
Investing activities None of the above b
 Solution UnitNumber
supplements the P & L
A/c and Balance sheet. 6
Investing activates
6
Public deposits 6
Not treated as cash flows
6
Investing activities
6

Call bonus
6

as in (a) & (b)

6
Financing activities
6
Financing activities 6
Financing activities 6
Increases cash flow from
Operating activities
6
Decreases flow from
operating activities
6
Financing activities 6
Investing activities 6
Operating activities
6
Financing activities 6
Investing activities 6
Operating activities 6
` 2,16,000
6
` 3,55,000
6
All of the above
6
Investing activity 6
Investing activity 6
Operating activity 6
Operating activity 6
Operating activity 6
Financing activity 6
Financing activity 6
Financing activity 6
Investing activity 6
Investing activity 6
Financing activity 6
Investing activity 6
Ignored 6
Operating activity
6
None of the above
6
Financing activities 6
Financing activities 6
Investing activities 6
Operating activities
6
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0:00

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0:00

0:00

0:00

0:00
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