McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration (BBA) .
Chapters
| 1. |
Statement of cash flows includes |
| A. | financing activities |
| B. | operating activities |
| C. | investing activities |
| D. | all of the above |
| Answer» D. all of the above | |
| 2. |
In cash flows, when a firm invests in fixed assets and short-term financial investments results in |
| A. | increased equity |
| B. | increased liabilities |
| C. | decreased cash |
| D. | increased cash |
| Answer» C. decreased cash | |
| 3. |
A firm that issues stocks and bonds to raise funds results in |
| A. | decreases cash |
| B. | increases cash |
| C. | increases equity |
| D. | indian overseas bank |
| Answer» B. increases cash | |
| 4. |
The purchase value of assets over its serviceable life is categorised as |
| A. | appreciated liabilities |
| B. | appreciated assets |
| C. | depreciation |
| D. | appreciation |
| Answer» C. depreciation | |
| 5. |
The basic financial statements include |
| A. | statement of cash flows |
| B. | income statement |
| C. | balance sheet |
| D. | all of the above |
| Answer» D. all of the above | |
| 6. |
Cash flow example from a financing activity is |
| A. | payment of dividends |
| B. | receipt of dividend on investment |
| C. | cash received from customers |
| D. | purchase of fixed asset |
| Answer» A. payment of dividends | |
| 7. |
Cash flow example from an investing activity is |
| A. | issue of debenture |
| B. | repayment of long-term loan |
| C. | purchase of raw materials for cash |
| D. | sale of investment by non-financial enterprise |
| Answer» D. sale of investment by non-financial enterprise | |
| 8. |
Cash flow example from an operating activity is |
| A. | purchase of own debenture |
| B. | sale of fixed assets |
| C. | interest paid on term-deposits by a bank |
| D. | issue of equity share capital |
| Answer» C. interest paid on term-deposits by a bank | |
| 9. |
Which item comes under financial activities in cash flow? |
| A. | redemption of preference share |
| B. | issue of preference share |
| C. | interest paid |
| D. | all the above |
| Answer» D. all the above | |
| 10. |
As per Accounting Standard-3, Cash Flow is classified into |
| A. | operating activities and investing activities |
| B. | investing activities and financing activities |
| C. | operating activities and financing activities |
| D. | operating activities, financing activities and investing activities |
| Answer» D. operating activities, financing activities and investing activities | |
| 11. |
Cash Flow Statement is also known as |
| A. | statement of changes in financial position on cash basis |
| B. | statement accounting for variation in cash |
| C. | both a and b |
| D. | none of the above. |
| Answer» C. both a and b | |
| 12. |
The objectives of Cash Flow Statement are |
| A. | analysis of cash position |
| B. | short-term cash planning |
| C. | evaluation of liquidity |
| D. | comparison of operating performance |
| Answer» D. comparison of operating performance | |
| 13. |
Cash Flow Statement is based upon |
| A. | cash basis of accounting |
| B. | accrual basis of accounting |
| C. | credit basis of accounting |
| D. | none of the above |
| Answer» A. cash basis of accounting | |
| 14. |
Which of the following statements are true? |
| A. | cash flow reveals only the inflow of cash |
| B. | cash flow reveals only the outflow of cash |
| C. | cash flow is a substitute for income statement |
| D. | cash flow statement is not a replacement of funds flow statement. |
| Answer» D. cash flow statement is not a replacement of funds flow statement. | |
| 15. |
In case of other enterprises cash flow arising from interest paid should be classified as cash flow from ________ while dividends and interest received should be stated as cash flow from ____. |
| A. | operating activities, financing activities |
| B. | financing activities, investing activities |
| C. | investing activities, operating activities |
| D. | none of the above |
| Answer» B. financing activities, investing activities | |
| 16. |
When a fixed asset is bought as hire purchase, interest element is classified under ______ and loan element is classified under________. |
| A. | operating activities, financing activities |
| B. | financing activities, investing activities |
| C. | investing activities, operating activities |
| D. | none of the above |
| Answer» B. financing activities, investing activities | |
| 17. |
Which of the following statements are false? |
| A. | old furniture written off doesn’t affect cash flow. |
| B. | cash flow statement is a substitute for cash account. |
| C. | appropriation of retained earnings is not shown in cash flow statement. |
| D. | net cash flow during a period can never be negative. |
| Answer» B. cash flow statement is a substitute for cash account. | |
| 18. |
Which of the following is not a cash outflow? |
| A. | increase in prepaid expenses |
| B. | increase in debtors |
| C. | increase in stock |
| D. | increase in creditors |
| Answer» D. increase in creditors | |
| 19. |
Cash flow statement is prepared for financial planning of |
| A. | long range |
| B. | medium range |
| C. | short range |
| D. | very long range |
| Answer» C. short range | |
| 20. |
Which of the following is source of cash? |
| A. | cash deposited into bank |
| B. | cash withdrawn from bank |
| C. | sale of goods costing ₹10,000 for ₹8,000 |
| D. | sale of marketable securities for cash |
| Answer» C. sale of goods costing ₹10,000 for ₹8,000 | |
| 21. |
Which of the following is not source of cash? |
| A. | issue of shares |
| B. | purchase of machinery |
| C. | sale of asset |
| D. | dividend received |
| Answer» B. purchase of machinery | |
| 22. |
Which of the following is not application of cash? |
| A. | increase in debtors |
| B. | increase in inventory |
| C. | increase in bills payable |
| D. | increase in prepaid expenses |
| Answer» C. increase in bills payable | |
| 23. |
If 6% Pref. share capital ₹2,00,000 were redeemed at a premium of 5%, while preparing Cash Flow Statement its effect on cash flow will be : |
| A. | cash used from financing activities ₹2,12,000 |
| B. | cash received from financing activities ₹2,12,000 |
| C. | cash used (payment) from financial activities ₹2,10,000 |
| D. | cash used (payment) from financial activities ₹2,00,000 |
| Answer» C. cash used (payment) from financial activities ₹2,10,000 | |
| 24. |
If the amount of goodwill is ₹40,000 at the beginning of a year and ₹48,000 at the end of that year then while preparing cash flow statement its effect on cash flow will be : |
| A. | cash used (payment) in investing activities ₹8,000 |
| B. | cash received from operating activities ₹8,000 |
| C. | cash used (payment) from operating activities ₹8,000 |
| D. | cash used (payment) from financial activities ₹8,000 |
| Answer» A. cash used (payment) in investing activities ₹8,000 | |
| 25. |
How will you deal increase in the balance of ‘Securities Premium Reserve’ while preparing a Cash Flow Statement? |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» C. cash flow from financing activities | |
| 26. |
A Ltd., engaged in the business of retailing of two wheelers, invested ₹50,00,000 in the shares of a manufacturing company. Dividend received on this investment will be : |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» B. cash flow from investing activities | |
| 27. |
How will you treat Bank Overdraft in a Cash Flow Statement? |
| A. | cash flow from operating activities ’ |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» C. cash flow from financing activities | |
| 28. |
Where will you show purchase of Goodwill in a Cash Flow Statement? |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» B. cash flow from investing activities | |
| 29. |
How will you treat payment of ‘Interest on Debentures’ while preparing a Cash Flow Statement? |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | cash equivalent |
| Answer» C. cash flow from financing activities | |
| 30. |
State whether cash deposited in bank will be classified under which kind of activity? |
| A. | cash flow from operating activities |
| B. | cash flow from investing activities |
| C. | cash flow from financing activities |
| D. | no cash flow |
| Answer» D. no cash flow | |
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