Tag: preparation of cash flow statement

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

AS-2 is not applicable in case of ___________.

  1. plantation products

  2. work-in-progress

  3. raw material

  4. stores
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Accounting Standard 2 (AS-2) deals with the valuation of inventories. It explicitly states that it does not apply to inventories of producers relating to livestock, agricultural and forest products, and mineral oils, ores, and gases.

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

Which of the following change(s) does / do not appear in a cash flow statement?

  1. Issue of equity shares

  2. Conversion of all FCDs into equity shares

  3. Bonus issue of equity shares

  4. All of the above

  5. Both (B) and (C)
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

A cash flow statement only tracks actual cash movements. Conversion of debentures into equity shares and the issuance of bonus shares are non-cash transactions; therefore, they do not appear in the cash flow statement.

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

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

  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.
Reveal answer Fill a bubble to check yourself
C Correct answer
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.

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

Cash withdrawal by the proprietor would cause _______.

  1. Cash in hand to decrease

  2. External liability to decrease

  3. Total liabilities to increase

  4. Total assets remain unchanged
Reveal answer Fill a bubble to check yourself
A Correct answer
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.  

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

Purchase of fixed assets is classified as ______________.

  1. Cash flow from operating activity

  2. Cash flow from investing activity

  3. Cash flow from financing activity

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The purchase of fixed assets involves the outflow of cash for long-term assets, which is categorized under investing activities in a cash flow statement.

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

Cash from investing activities arise from _____________________.

  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
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Investing activities in a cash flow statement specifically relate to the acquisition and disposal of long-term assets and other investments not included in cash equivalents.

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

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

  1. Cash flow from financing activity

  2. Cash flow from operating activity

  3. Cash flow from investing activities

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

Under AS-3, dividends paid are classified as cash flows from financing activities because they represent the cost of obtaining financial resources (equity).

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

Redemption of debenture is a / an _______________.

  1. Operating activities

  2. Investing activities

  3. Financing activities

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Redemption of debentures involves the repayment of borrowed capital, which is a cash outflow related to the company's capital structure, thus classified as a financing activity.

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

The term 'funds' as used in fund flow statement means ________________.

  1. Cash

  2. Current assets

  3. Current liabilities

  4. Current assets and liabilities
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Fund flow statement is a statement of cash inflows and cash outflows. There are persons who feel that the funds are cash or working capital which represent the excess of current assets over current liabilities. The term flow means movement and includes both inflows and outflows of resources.And the funds used in the flow statement is a current assets.

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

Decrease in working capital appear in fund flow statement in _________ side.

  1. Sources

  2. Application

  3. Both (A) and (B)

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

Working capital is current assets less current liabilities. A decrease in the net current assets leads to increase in fund flow which needs to be included. Hence, It appear in sources.