Tag: accountancy

Quizzes (207) Questions (428)

Questions Related to accountancy

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

Cash Flow Statement does not disclose the ________ .

  1. cash inflow

  2. cash outflow

  3. financial position

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A cash flow statement only reports the movement of cash. It does not provide a comprehensive view of the overall financial position (assets, liabilities, and equity), which is the purpose of the balance sheet.

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

Investing Activities are the acquisition and disposal of long-term assets and other investments included in cash equivalents.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Investing activities involve the acquisition and disposal of long-term assets. Cash equivalents are specifically excluded from investing activities as they are part of the cash balance itself.

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

Operating activities are the principal revenue producing activities of the enterprise and other activities that are not investing or financing activities.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Operating activities are defined as the principal revenue-producing activities of the entity and other activities that are not investing or financing activities.

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

Which of the following is not the objective of cash flow statement?

  1. To show cash and cash equivalent generated.

  2. To show cash and cash equivalent used.

  3. To show net changes in cash and cash equivalents.

  4. None of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The main objective of preparing cash flow statement for a particular accounting period is to present information regarding inflow and outflow of cash, cash and cash equivalent generated , used, and net changes in cash flows.

Besides,

It presents the investment and financial activities of a concern for a particular period. It also fulfills the following objectives;

  • Ensuring future positive cash flow of particular concern.
  • Ensuring capacity of an organization to pay a dividend.
  • Identifying non-cash items ensuring cash income and expenses of a concern.
  • Comparing various items of the current year with those of last year.

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

Which of the following is not the limitation of cash flow statement?

  1. Non-cash Trasactions are not reported.

  2. Not a substitute for Income Statement.

  3. Not a sustitute for Balance sheet.

  4. Comparative study.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Comparative study is an analytical tool used to interpret financial statements; it is not a limitation of the cash flow statement itself.

Multiple choice trend analysis tools for financial analysis analysis of financial statements financial statement analysis accountancy

Financial statement analysis helps to identify the areas where the managers have been efficient and the areas where they have been lacking behind.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

True. Financial statements helps to understand the financial position of the company. It helps to understand the deviation between the actual position and the position that the company had planned. By looking at the deviation the company can understand how efficiently the managers have worked. 

Multiple choice trend analysis tools for financial analysis analysis of financial statements financial statement analysis accountancy

In periods of inflation, accounting depreciation is ______________ relative to replacement cost and real economic income is ______________.

  1. overstated, overstated

  2. overstated, understated

  3. understated, overstated

  4. understated, understated
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

During inflation, historical cost depreciation is understated relative to the current replacement cost of assets. Consequently, because expenses are understated, the reported real economic income is overstated.

Multiple choice trend analysis tools for financial analysis analysis of financial statements financial statement analysis accountancy

Financial Analysis does not help the users of the financial statements to understand the complicated matters in simplified manner.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

False. Financial Analysis helps the users of the financial statements to understand the complicated matters in a simplified manner. Financial analysis is reviewing and analyzing of financial data, understand the past, present and future projected data. 

It gives a useful insight to the users as to what is the condition of the company.

Multiple choice trend analysis tools for financial analysis analysis of financial statements financial statement analysis accountancy

On the basis of financial analysis, earning capacity of the enterprise cannot be assessed or computed.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

False. On the basis of financial analysis, earning capacity of the enterprise can be assessed or computed. Financial analysis means analysing the financial statements of the firm to make financial decisions. It helps in assessing the earning capacity, present position, past performance, managerial efficiency and helps in inter-firm comparison.