CBSE Questions for Class 12 Commerce Accountancy Cash Flow Statement Quiz 2 - MCQExams.com

Which of the following transactions will increase an asset and also decrease an asset ?
  • Stores purchased on account
  • Stores purchased on cash
  • Payment of promissory note with cash
  • Declaration of a dividend
  • All of the above
Which of the following is not a cash outflow for the firm?
  • Depreciation
  • Dividends
  • Interest payments
  • Taxes
Cash payments for income taxes are included on the statement of cash flows as ______________.
  • Financing activities
  • Investing activities
  • Operating activities
  • Non-operating activities
Which of the following statement 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, B and C
  • B, C and D
  • C, D and A
  • None of the above
In the case of financial enterprises, the cash flow resulting from interest and dividend received and interest paid should be classified as cash flow from _____________.
  • Operating activities
  • Financing activities
  • Investing activities
  • None of the above
Which of the following is not a cash inflow?
  • Decrease in debtors
  • Issue of shares
  • Decrease in creditors
  • Sale of fixed assets
If operating expenses is $$75\%$$ then operating profit will be __________.
  • $$25\%$$
  • $$100\%$$
  • $$50\%$$
  • $$175\%$$
Which of the following is not a cash outflow?
  • Increase in prepaid expenses
  • Increase in debtors
  • Increase in stock
  • Increase in creditor
Which of the following is a false statement ?
  • Cash flow statement discloses the complete story of cash movements
  • Cash flow statement helps in evaluating financial policies and cash position
  • Cash flow statement is useful for long-term planning
  • Cash flow statement helps the management in determining policies regarding internal financial management
Which of the following items is not an operating expense?
  • Advertising
  • Depreciation of office equipment
  • General management salaries
  • Loss on the sale of motor car
On an accounting statement of cash flows an "increases(decrease) in cash and cash equivalent" appears as ________________.
  • A cash flow from operating activities
  • A cash flow from investing activities
  • A cash flow from financing activities
  • None of the above
A building standing in the books at Rs. $$40,000$$ was sold for Rs. $$52,000$$. The profit on sale of building was transferred to profit & loss account thus increasing the net profit to Rs. $$1,80,000$$. What is the fund from operation?
  • Rs. $$1,80,000$$
  • Rs. $$1,92,000$$
  • Rs. $$1,68,000$$
  • Rs. $$1,82,000$$
When Gross Profit Rs. $$5,00,000$$, Wages Rs. $$10,000$$, Cost of Goods sold Rs. $$3,00,000$$, Rent paid Rs. $$25,000$$, Salaries paid Rs. $$1,00,000$$, Commission be allowed Rs. $$3,000$$, Discount allowed Rs. $$2,000$$, Provision for doubtful debts Rs. $$5,000$$, Provision for legal damages Rs. $$3,000$$, Provision for taxation Rs. $$1,50,000$$, Provision for depreciation Rs. $$50,000$$ and Refund of tax Rs. $$2,000$$, then the amount of funds from operations is __________.
  • Rs. $$3,60,000$$
  • Rs. $$3,57,000$$
  • Rs. $$3,54,000$$
  • Rs. $$3,62,000$$
Which one of the following combination of rules stands true while preparing schedule of changes in working capital?
(A)An increase in current assets increase working capital.
(B)An increase in current assets decrease working capital.
(C)An increase in current liabilities decreases working capital.
(D)An increase in current liabilities increase working capital.
  • (A) and (D)
  • (A) and (C)
  • (B) and (C)
  • (C) and (D)




Given that assetsRs.$$20,00,000$$
TaxRs. $$25,000$$
Profit before taxRs. $$2,25,000$$
Net worthRs. $$10,00,000$$
What is the Return on Equity (ROE)?
  • $$10\%$$
  • $$12.5\%$$
  • $$20\%$$
  • $$25\%$$
The difference between cash flow statement and cash budget is/are __________________.
  • Cash flow statement shows the movement of cash whereas cash budget portrays no cash movement.
  • Cash flow statement is a part of cash budget
  • Cash budget shows the cash movement of the future period in contrast to cash flow statement where it displays the cash movement of the past period.
  • All of the above
  • Both (B) and (C) above
Which of the following are non-operating incomes?
(i) Sale of merchandise
(ii) Interest income
(iii) Dividend income
(iv) Profit on the sale of old asset ____________.
  • i, ii & iii
  • i, ii & iv
  • ii, iii & iv
  • i, iii & iv
Cash Management and Insurance are chief function of the ____________.
  • Tax Manager
  • Controller
  • Treasurer
  • Accountant
  • Finance Manager
Purchase of stock-in-trade on credit results into _______________.
  • Source of funds
  • Application of funds
  • No flow of funds
  • All of the above
A surplus in BOP means
  • Increase in loans
  • Outflow of income
  • Inflow of income
  • None of the above
____________ shows the details of cash generating and utilization activities of a company during a given period of time.
  • Cash flow statement
  • Profit and Loss A/c
  • Balance sheet
  • Segment reports
The financial ratio (the best single predictor) that is used in the Beavers Model to predict the failure of a company is the _____________.
  • Debt-equity ratio
  • Cash flow to total debt ratio
  • Price earnings ratio
  • Return on investment
  • None of the above
The key issue in an international cash management is
  • Giving sufficient independence to individual subsidiaries
  • Centralizing and minimizing independence of subsidiaries
  • Deciding whether hedging is required or not
  • Striking the right balance between decentralization and centralization
  • None of the above
An over valuation of previous years opening inventory will...........
  • Causes current year's net income to be overstated
  • Causes previous year's net income to be understated
  • Causes previous year's net income to be overstated
  • Have no effect
........ exposure can not be managed by traditional hedging techniques due to unpredictability of the changes in the cash flows. It requires various marketing, production and financial management strategies to cope with the risk.
  • Translation
  • Transaction
  • Economic
  • None of the above
An undervaluation of previous year's opening inventory will.........
  • Cause current years net income to be overstated
  • Causes previous year net income to be understated
  • Causes previous year net income to be overstated
  • None
Revenues affect net income ......
  • in the period during which they are earned
  • in the period during when they are collected
  • in the period during when they are accounted for
  • any of the above three which occur first
Cash flow statements reflects _______
  • fund position
  • operating performance
  • financial performance
  • solvency position
Income or expenses that arises from events or transactions that are clearly distinct from the ordinary activities of the enterprises and therefore are not expected to recur frequently or regularly are called ___________.
  • prior-period items
  • extraordinary items
  • abnormal items
  • non-ordinary items
Which of these is a non-operating income?
  • Dividend on investment
  • Recovery of bad debts
  • Sale proceed of goods sold
  • Discount given by suppliers
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