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MCQs

Cash Flow Statement

Total Questions : 118 | Page 2 of 12 pages
Question 11. A company sells old plant for Rs. 12,000 cash. The book value of the plant is Rs. 7,000. This transaction would affect:
  1.    Investing activities
  2.    Financing activities
  3.    Both investing and financing activities
  4.    None of these
 Discuss Question
Answer: Option A. -> Investing activities
:
A
This transaction would affect investing activitiessince it is related to fixed assets
Question 12. Non-cash expenses like depreciation, depletion & amortization expense are _______ to net profit before tax under indirect method.
  1.    Not treated
  2.    Added
  3.    Subtracted
  4.    None of these
 Discuss Question
Answer: Option B. -> Added
:
B
Non-cash expenses like depreciation, depletion & amortization expense are added to net profit before tax under indirect method.
Question 13. The statement of cash flows clarifies cash flows according to :
  1.    Operating and non-operating flows
  2.    Investing and Non-operating flows
  3.    Inflows and outflows
  4.    Operating, investing and financing activities
 Discuss Question
Answer: Option D. -> Operating, investing and financing activities
:
D
The statement of cash flows clarifies cash flows according to operating, investing and financing activities.
Question 14. Cash flow from operating activities excludes money that is spent on capital expenditures. True or False
  1.    True
  2.    False
  3.    A cash outflow for purchase of fixed asset
  4.    A cash outflow to purchase bonds issued by another company
 Discuss Question
Answer: Option A. -> True
:
A
True.Cash flow from operating activities excludes money that is spent on capital expenditures.
Question 15. Example of cash flow from financing activity is :
  1.    Payment of dividend
  2.    Receipt of dividend on investment
  3.    Cash received from customer
  4.    Purchase of fixed Asset
 Discuss Question
Answer: Option A. -> Payment of dividend
:
A
Example of cash flow from financing activity is payment of dividend
Question 16. Which of the following is incorrect about the statement of cash flows?
  1.    It provides information about the cash receipt and cash payments of an enterprise.
  2.    It reconciles ending cash balance with the balance as per bank statement.
  3.    It provides information about the operating, investing and financing activities
  4.    None of these
 Discuss Question
Answer: Option B. -> It reconciles ending cash balance with the balance as per bank statement.
:
B
It reconciles ending cash balance with the balance as per bank statementis incorrect about the statement of cash flows
Question 17. A financial statement that shows the inflows and outflows of cash during a particular period of time is known as:
  1.    Income Statement
  2.    Statement of Retained Earnings
  3.    Balance Sheet
  4.    Statement of Cash Flows
 Discuss Question
Answer: Option D. -> Statement of Cash Flows
:
D
A financial statement that shows the inflows and outflows of cash during a particular period of time is known as statement of cash flows.
Question 18. It’s one of the purest measures of cash sources and uses.
  1.    Operating Activities
  2.    Investing Activities
  3.    Financing Activities
  4.    None of these
 Discuss Question
Answer: Option A. -> Operating Activities
:
A
Operating Activities isone of the purest measures of cash sources and uses.
Question 19. In particular, which cash flow can uncover a company's true profitability?
  1.    Operating
  2.    Investing
  3.    Financing
  4.    None of these
 Discuss Question
Answer: Option A. -> Operating
:
A
In particular, operating cash flow can uncover a company's true profitability
Question 20. Receipt of interest is to be _________ from net profit.
  1.    added
  2.    deducted
  3.    not to be treated
  4.    none of these
 Discuss Question
Answer: Option B. -> deducted
:
B
Receipt of interest is to be deducted from net profit.

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