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Cash Flow Statement

Total Questions : 118 | Page 3 of 12 pages
Question 21. Purchase of machinery by means of issue of shares should be ___ from cash flow statement
  1.    Included
  2.    Excluded
  3.    Subtracted
  4.    None of these
 Discuss Question
Answer: Option B. -> Excluded
:
B
Purchase of machinery by means of issue of shares should be excluded from cash flow statement as it doesnot involve cash.
Question 22. Short term highly liquid investments that are readily convertible in to known amounts of cash and which are subject to insignificant risk of changes in value is known as ___
  1.    Cash at bank
  2.    Investment in shares
  3.    Cash equivalents
  4.    None of these
 Discuss Question
Answer: Option C. -> Cash equivalents
:
C
Short term highly liquid investments that are readily convertible in to known amounts of cash and which are subject to insignificant risk of changes in value is known as cash equivalents
Question 23. Increase in current liabilities like accounts payable, accrued liabilities, income tax payable etc. are _________ under indirect method.
  1.    Not treated
  2.    Added
  3.    Subtracted
  4.    None of these
 Discuss Question
Answer: Option B. -> Added
:
B
Increase in current liabilities like accounts payable, accrued liabilities, income tax payable etc. are added under indirect method.
Question 24. Cash proceeds from issue of shares will result in cash _________ from financing activities.
  1.    Inflow
  2.    Outflow
  3.    Either inflow or outflow
  4.    None of these
 Discuss Question
Answer: Option A. -> Inflow
:
A
Cash proceeds from issue of shares will result in cash inflow from financing activities.
Question 25. Cash Flow Statement useful for _____.
  1.    Short term financial planning only
  2.    Ascertaining cash flow from various activities separately only 
  3.    Both: Short term financial planning Ascertaining cash flow from various activities separately
  4.    None of these
 Discuss Question
Answer: Option C. -> Both: Short term financial planning Ascertaining cash flow from various activities separately
:
C
Cash flow statement useful for both short term financial planning and ​​​​ascertaining cash flow from various activities separately
Question 26. Decrease in current assets are ________ under indirect method.
  1.    Not treated
  2.    Added
  3.    Subtracted
  4.    None of these
 Discuss Question
Answer: Option B. -> Added
:
B
Decrease in current assets are added under indirect method.
Question 27. An example of cash flow from operating activity for financing company:
  1.    Payment of dividend
  2.    Sale of fixed assets
  3.    Payment of interest 
  4.    Issue of equity share capital
 Discuss Question
Answer: Option C. -> Payment of interest 
:
C
Payment of interest is an example of cash flow from operating activity for financing company.
Question 28. An example of cash flow from investing activity is :
  1.    Issue of debenture
  2.    Repayment of long term loan
  3.    Purchase of raw materials for cash
  4.    Sale of investment by non-financial enterprise
 Discuss Question
Answer: Option D. -> Sale of investment by non-financial enterprise
:
D
An example of cash flow from investing activity is sale of investment by non-financial enterprise.
Question 29. For non-financing company, the payment of interest is a/an _______
  1.    Operating activity
  2.    Investing activity
  3.    Financing activity
  4.    None of these
 Discuss Question
Answer: Option C. -> Financing activity
:
C
For non-financing company, the payment of interest is a financing activity.
Question 30. In the long run, a business must generate positive net cash flow from which of the following activities, if it is to survive?
  1.    Operating activities
  2.    Investing activities
  3.    Financing activities
  4.    Non cash activities
 Discuss Question
Answer: Option A. -> Operating activities
:
A
In the long run, a business must generate positive net cash flow from operating activities, if it is to survive.

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