Cash Flow Statement MCQs

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Cash Flow Statement MCQs are Useful
for the following Exams:
1) Class 12 Exams (CBSE, AHSEC, State Boards)
2) BBA and MBA
3) CMA, ICAI and ICSI Exam
4) Dibrugarh University
5) Gauhati University
6) Mumbai and Pune University
7) M.Com Entrance Exams
8) All Competitive exams for Commerce stream
students
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1. Cash flow statement is based upon:
a) Cash basis
b) Accrual Basis
c) Accounting Equation
d) Both cash and accrual basis
Ans: a) Cash basis

2. The objectives of cash flow statements are:

a) Short term cash planning
b) Analysis of cash position
c) Comparison of operating performance
d) All of the above
Ans: d) All of the above
3. An example of cash flow investing activity is:
a) Issue of debentures
b) Repayment of long-term loan
c) Purchase of raw materials for cash
d) Sale of investment by non –financial enterprise
Ans: d) Sale of investment by non –financial enterprise

4. Increase in amount of prepaid expense results in:

a) Increase in cash
b) Decrease in cash
c) No change in cash
d) None of the above
Ans: b) Decrease in cash
5. Dividend received by other than financial enterprise is
shown in the cash flow statement under:
a) Operating Activities
b) Investing Activities
c) Financing Activities
Ans: b) Investing Activities

6. Cash from operating activities will decrease due to:

a) Payment of expenses
b) Payment of taxes
c) Payment to creditors
d) All of the above
Ans: d) All of the above
7. Cash flow statement according to AS 3 is mandatory to:
a) All listed companies
b) One Person Company
c) Small company
d) Dormant company
Ans: a) all listed companies

8. Cash flow from operating activities consists of:

a) Operating profit
b) Increase/Decrease in current assets
c) Increase/Decrease in current liabilities
d) All of the above
Ans: d) All of the above
Fill in the blanks:

1) The cash flows statement is a statement of inflows and

outflows of cash and Cash Equivalents.

2) Cash comprises cash on hand and demand deposits with

banks.

3) Cash Equivalents are short-term, highly liquid investments

that are readily convertible cash.

4) The cash flow from operating activities is derived from

the principle revenue producing activities of the organisation.

5) Increase in current asset is an outflow of cash.

State whether the following statements are true or false:
1. Cash flow statement is concerned with changes in working
capital position between two balance sheet dates.    False

2. Cash generated from trading operations is equal to the net

profit as reported in the profit and loss account.          False

3. Operating activities are the revenue generating activities of

the enterprise.    True

4. Financing activities constitute the purchase and sale of long

term assets and other investments not included in cash and
its equivalents.  False, Investing activities

5. Investing activities are activities that result in change in the

share capital and borrowings of the enterprise. False
For more than 100 MCQS relating to Cash flow
statements

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mcq-cash-flow-statement-cash-flow.html