Tag: accountancy

Questions Related to accountancy

An example of cash flow from a financing activity is ___________________.

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. Receipt of cash from sale of land.

  2. Receipt of cash from collection of accounts receivable.

  3. Payment of cash for acquisition of treasury stock.

  4. Payment of cash for new machinery.

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Correct Option: C
Explanation:

As per AS-3, financing activities are activities are activities that result in change in the size and composition of the owners' capital and borrowings of the enterprises.

Cash withdrawal by the proprietor would cause _______.

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. Cash in hand to decrease

  2. External liability to decrease

  3. Total liabilities to increase

  4. Total assets remain unchanged

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Correct Option: A
Explanation:

The owner's capital is the part of the accounting equation that represents the liquid cash that the company has earned, which it has on hand for daily operations as well as capital investments. When a business owner withdraws cash for personal use, these funds come out this capital account. Proprietor withdrawal cash or other asset from business recorded as credit to cash and a debit to the proprietor draws account i.e. cash in hand to decrease.  

Purchase of fixed assets is classified as ______________.

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  1. Cash flow from operating activity

  2. Cash flow from investing activity

  3. Cash flow from financing activity

  4. None of these

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Correct Option: B

Cash from investing activities arise from _____________________.

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. Cash flows on account of dealing in fixed assets and long term investments

  2. Cash flows on account of purchase and sale of goods

  3. Cash flows on account of short term investments

  4. None of the above

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Correct Option: A

Dividend paid, under AS-$3$, is _______________.

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. Cash flow from financing activity

  2. Cash flow from operating activity

  3. Cash flow from investing activities

  4. None of the above

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Correct Option: A

Redemption of debenture is a / an _______________.

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. Operating activities

  2. Investing activities

  3. Financing activities

  4. None of these

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Correct Option: C

Which one of the following is not a method of credit control?

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. Bank rate policy

  2. Open market operations

  3. Credit deposit ratio

  4. Cash reserve ratio

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Correct Option: D

Which of the following is the limitation of the cash flow statement?

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. Historical in nature.

  2. Discloses Success or Failure of Cash Planning.

  3. Reasons for Cash positions.

  4. Comparative study.

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Correct Option: A

Short-term Investments and Marketable Securities are included in Cash and Cash Equivalent.

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. True

  2. False

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Correct Option: A

Cash Flow Statement helps in understanding liquidity and solvency.

accountancy statement of changes in financial position preparation of cash flow statement cash flow statement finance

  1. True

  2. False

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Correct Option: A