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CBSE Questions for Class 12 Commerce Accountancy Cash Flow Statement Quiz 4 - MCQExams.com
CBSE
Class 12 Commerce Accountancy
Cash Flow Statement
Quiz 4
When funds from operations are Rs. 65,000 and depreciation on plant is Rs. 7,500, the amount of net profit
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0%
Is Rs. 65,000
0%
Is Rs. 72.500
0%
Is Rs. 57,500
0%
Cannot be computed
Explanation
Net Profit = Funds from Operations - Depreciation
= 65000 - 7500
= 57,500
Some companies give cash flow statements in their annual reports as prescribed by ____________________.
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Part IV of Schedule VI to the Companies Act 1956
0%
The listing agreement with the stock exchanges
0%
The SEBI regulations
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The Accounting Standard 3 on cash flow statements
Revenue from sale of goods manufactured is shown in the statement of profits and loss as ____________________.
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0%
Revenue from operations
0%
Other Income
0%
Any of the above
0%
None of the above
Explanation
Revenue from sale of goods manufactured is shown in the statement of profit and loss as revenue from operations because goods manufactured is the main activity and hence, sale of the goods manufactured is a part of main business activity.
Sale of goods manufactured is an operating activity of the business and any revenue that arises from the same will be shown in revenue from operations.
The following is the position of current assets and current liabilities of XY Ltd.
2014 2015
Debtors 20,000 25,000
Creditors 15,000 17,000
Bills Payable 18,000 20,000
Stock 16,000 26,000
Loss incurred during year was Rs.10,What is the amount of cash from operations?
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0%
Rs. 37,000 (-)
0%
Rs. 29,000 (-)
0%
Rs. 12,000 (+)
0%
Rs. 21,000 (-)
Explanation
Particulars
Loss incurred during the year
Amount
(10,000)
Add:- Increase in Current liabilities, decrease
current assets
1) Increase in Creditors
(17,000 - 15,000)
2)Increase in Bills payable (20,000 - 18,000)
2,000
2,000
Less:-
Increase in Current Assets, Decrease in Current
liabilities
1) Increase in Debtors
(25,000 - 20,000)
2) Increase in stock (26,000 - 16,000)
(5,000)
(10,000)
Cash from operations
(21,000)
Which of the monetary policy tool(s) is /are NOT with government securities?
Cash Reserve Ratio
Repo Rate
Statutory Liquidity Ratio
Marginal Standing Facility
Select the correct answer using the
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0%
1 and 2 only
0%
1 only
0%
1 and 4 only
0%
4 only
Sum of discounted cash flows is best defined as _____________.
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0%
technical equity
0%
defined future value
0%
project net present value
0%
equity net present value
Free cash flow is Rs 17000 and net investment in operating capital is Rs 10000 then net operating profit after taxes would be __________.
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0%
Rs 7, 000.00
0%
Rs 27, 000.00
0%
- Rs 27, 000.00
0%
- Rs 7, 000.00
Which Accounting Standard is applicable for preparation of Cash Flow Statement?
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Accounting Standard - 6
0%
Accounting Standard - 3
0%
Accounting Standard - 2
0%
Accounting Standard - 13
Explanation
A cash flow statement refers to
a statement showing the cash inflows and outflows or the financial position of a business during different intervals of time in terms of cash and cash equivalents
. Its accounting treatment is done under Accounting Standard 3. Hence, the correct option B.
Cash outflows are costs of project and are represented by ____________.
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0%
negative numbers
0%
positive numbers
0%
hurdle number
0%
relative number
Which of the following transactions will result into flow of cash ?
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Cash withdrawn from bank $$Rs 71,000$$.
0%
Issue of $$9\%$$ debentures of $$Rs 1,00,000$$ to the vendors of machinery.
0%
Received from debtors $$Rs 74,000$$
0%
Redeemed $$10\%$$ debentures by converting the same into equity shares.
Explanation
Amount received from debtors $$Rs 74,000$$ will be received in cash. This is the only transaction that results in flow (inflow) of cash into the business.
Why other options are incorrect?
1. Deposit of cash into bank and withdrawal of cash from bank are merely the cash management activities of the business. They do not involve any cash flow.
2. Conversion of debentures into equity shares is a mere change in capital structure of the company. It does not result in cash flow.
Hence, the correct answer is option (iii).
Net investment in operating capital is Rs 5000 and net operating profit after taxes is Rs 8000 then free cash flow would be __________.
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0%
Rs 13, 000.00
0%
- Rs 3, 000.00
0%
Rs 3, 000.00
0%
- Rs 13, 000.00
Free cash flow is Rs 12000, an operating cash flow is Rs 4000, an investment outlay cash flow is Rs 5000 then salvage cash flow would be _______________.
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0%
-Rs 21, 000.00
0%
Rs 21, 000.00
0%
-Rs 3, 000.00
0%
Rs 3, 000.00
In calculation of net cash flow, deferred tax payments are classified as _______________.
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0%
non-cash revenues
0%
non-cash charges
0%
current liabilities
0%
income expense
Depreciation is a _________.
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0%
Cash operating expenditure
0%
Non-cash operating expenditure
0%
Cash non-operating expenditure
0%
Non-cash non-operating expenditure
Explanation
Operating expenses are those expenses which are incurred on a day to day basis for smooth business operations. Depreciation is also an operating expense.
Depreciation is charged on fixed assets and charged to profit & loss account. As depreciation is a book entry by debiting the expense account and crediting to the respective asset account, there is no cash outflow. Hence depreciation is called as non cash operating expense.
Flow of funds means ___________.
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0%
Change in funds
0%
Change in working capital
0%
Either (A) or (B)
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Change in cash receipts (or) payments
Explanation
Flow of funds are used to track the the flow of money to and from various sectors of a national economy. It is used to track the changes in the assets and liabilities of the company. It depicts the changes in funds as well as working capital.
Depreciation is incorporated in cash flows because it _______________.
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0%
is unavoidable cost
0%
is a cash flow
0%
reduces tax liability
0%
involves an outflow
Explanation
Depreciation is a non-cash item, but to know the profitability of the organisation, it is charged to profit & loss account.
Due to charge of depreciation, organisation gets the tax benefit.
Therefore, such tax saved is considered as a cash inflow as it reduces the tax expenses by creating a charge against taxable income.
If there is no inflation during a period, then the money cashflow would be equal to
_____________.
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0%
Present value
0%
Real cash flow
0%
Real cash flow + present value
0%
Real cash flow present value
Explanation
Inflation is defined as the increase in prices of general goods and services. If there is no inflation during a particular period, there will be no impact on cash flows. The money cash flow must be equal to real cash flow.
Cash flow statement is also known as _____________.
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Statement of changes in financial position on cash basis
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Statement accounting for variation in cash
0%
Both (A) and (B)
0%
None of the above
Explanation
Statement of cash flows, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.
Cash flow statement is a statement showing the inflow and outflow of the cash of a company classified in 3 categories of activities:
1. Operating cash flows
2.Investing cash flows
3.Financing cash flows
It involves movement of the cash in the company from these 3 categories of activities. Therefore, It is a statement depicting changes in cash position from one period to another.
As per Accounting standard-3, cash flow is classified into ___________________.
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0%
Operating and investing activities
0%
Investing and financing activities
0%
Operating and financing activities
0%
Operating, financing and investing activities
Explanation
Statement of cash flows, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities.
Cash flow statement is a statement showing the inflow and outflow of the cash of a company classified in 3 categories of activities:
1. Operating cash flows
2.Investing cash flows
3.Financing cash flows
It involves movement of the cash in the company from these 3 categories of activities.
Therefore, It is a statement depicting changes in cash position from one period to another.
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