Tag: finance

Questions Related to finance

A loss on sale of land is reflected on the statement of cash flows by _____________________.

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

  1. Adding the loss to the book value of the land to determine the cash flow from investing activities

  2. Deducting the loss from net income to determine the cash flow from operating activities

  3. Deducting the loss from the book value of the land to determine the cash flow from investing activities

  4. Both B and C

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Correct Option: C
Explanation:

A business reports net income under operating activities of cash flow statement. The company reports a loss from sale of a long-term business assets as part of its net income because it represents money spent that the business didn't recoup. The difference amount between loss and book value is reported under investing activities.

A company who issue bonds or stocks in result raised funds which finally ____________.

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

  1. Increases liabilities

  2. Increases equity

  3. Increases cash

  4. Decreases cash

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Correct Option: C
Explanation:

Companies may increase cash levels through financing and investing activities. 

Financing activities include proceeds from bank loans and from issuing stocks or bonds to investors.

AS-2 is not applicable in case of ___________.

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

  1. plantation products

  2. work-in-progress

  3. raw material

  4. stores

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Correct Option: A

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

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

  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)

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Correct Option: E

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 ______________.

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

  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