MCQ Questions for Class 12 Accountancy Chapter 6 Cash Flow Statement

Cash Flow Statement Class 12 MCQ is one of the best strategies to prepare for the CBSE Class 12 Board exam. If you want to complete a grasp concept or work on one’s score, there is no method except constant practice. Students can improve their speed and accuracy by doing more MCQ of Cash Flow Statement Class 12 which will help them all through their board test.

Cash Flow Statement Class 12 MCQ Questions with Answers

Class 12 Accountancy MCQ with answers are given here to chapter the Cash Flow Statement. These MCQs are based on the latest CBSE board syllabus and relate to the latest Class 12 Accountancy syllabus. By Solving these Class 12 MCQs, you will be able to analyze all of the concepts quickly in the chapter and get ready for the Class 12 Annual exam.

Learn Cash Flow Statement Class 12 MCQ Questions with answers PDF free download according to the latest CBSE and NCERT syllabus. Students should prepare for the examination by solving CBSE Cash Flow Statement Class 12 MCQ with answers given below.

Question 1: Principal revenue generating activities of an enterprise are called as
(a) Operating activities
(b) Financing activities
(c) Investing activities
(d) All of the options

Question 2: Refund of income tax is the part of
(a) Operating activities in Cash Flow Statement
(b) Financing Activities in Cash Flow Statement
(c) Investing Activities in Cash Flow Statement
(d) All of the options

Question 3: How many methods for the preparation of cash flow statement
(a) 2
(b) 3
(c) 4
(d) 5

Question 4: Cash flows from financing activities are those that take place between
(a) Firm and its investors
(b) Sundry Creditors and Sundry Debtors
(c) Net profit & loss
(d) All of the options

Question 5: Expenses paid in advance at the end of the year are______________the profit made during the year
(a) Deducted from
(b) Added to
(c) Divided to
(d) All of the options

Question 6: Which of the following is an example of non cash Exp
(a) Depreciation
(b) Wages and salaries
(c) Telephone Exp
(d) All of the options

Question 7. A company receives a dividend of X2 Lakhs on its investment in other company’s shares. In case of a Finance Company, it 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

Question 8. GSC Ltd. purchased machinery of Rs. 10,00,000 issuing a cheque of Rs. 2,50,000 and 10% Debentures of Rs. 7,50,000. ln the Cash Flow Statement, the transaction will be shown as
(a) Outflow under Investing Activity Rs. 10,00,000, inflow under Financing Activity as Receipt for Debentures Rs. 7,50,000.
(b) Outflow under investing Activity Rs. 2,50,000.
(c) Inflow of Rs. 7,50,000 as Financing Activity.
(d) None of the above.

Question 9: A decrease in the current asset account Prepaid Insurance.
(a) Operating Activity
(b) Investing Activity
(c) Financing Activity
(d) Supplemental Activity

Question 10: A company who issues bonds or stocks in result raised funds which finally
(a) Increases cash
(b) Decreased cash
(c) Increased liabilities
(d) Increased equity

Question 11: Cash flow statement is based upon _________ basis of accounting
(a) On Cash basis
(b) On Accrual Basis
(c) Non Cash Basis
(d) All of the options

Question 12: Which of the following is not a source of finance
(a) Fixed Assets
(b) Debentures
(c) Bank Overdraft
(d) Bank Loan

Question 13: The statement of cash flows is designed with the purpose of helping users to assess each of the following, except
(a) The profitability of the entity
(b) The major sources of cash receipts during the period
(c) The reasons why net cash flows from operating activities differ from net income
(d) The ability of a entity to remain liquid

Question 14: Which of the following transactions would not create a cash flow
(a) Amortization of a patent.
(b) Payment of dividend.
(c) Sale of office equipment at book value.
(d) Goods purchased in cash

Question 15: Interest on long term borrowings is an Expense relating to financial activities and shown as ______ of cash.
(a) Outflow
(b) Inflow
(c) Income
(d) All of the options

Question 16: For the calculation of cash flow from operating activities, payments and receipts shown in Profit & Loss account are converted into payments and receipts actually in cash by eliminating
(a) Non-cash revenue from the revenue earned and Non-cash expenses from expenses incurred
(b) Non-cash revenue from the revenue earned
(c) Non-cash expenses from expenses incurred
(d) None of the options

Question 17: Which of the following is not a cash inflow
(a) Decrease in creditors
(b) Decrease in debtors
(c) Issue of shares
(d) Sale of fixed assets

Question 18: Sale of Copyrights is concerned with_______
(a) Investing Activities
(b) Operating Activities
(c) Both Operating Activities and Financing Activities
(d) Financing Activities

Question 19: Dividend Received is concerned with_________
(a) Operating Activities
(b) Financing Activities
(c) Investing Activities
(d Both Operating Activities and Financing Activities 

Question 20. Which of the following is an example of cash flow from Operating Activities?
(a) Issue of Shares
(b) Purchase of Machinery
(c) Purchase of Investment
(d) Purchase of Inventory for Cash

Question 21: The main difference in direct and indirect method is to calculate the
(a) Cash flow from operating activities
(b) Cash Flow from Financing Activities
(c) Cash Flow from Investing Activities
(d) All of the options 

Question 22: In indirect method, Which is used to calculate the amount of net cash flow from operating activities
(a) Net loss figure from Profit & Loss
(b Net Profit figure from Profit & Loss
(c) All of the options 
(d) Net income figure from the income statement

Question 23: Which activities are the same for Computation of Direct and indirect method
(a) Cash Flow from Financing Activities and Cash flow from Investment activities
(b) Cash Flow from Operating Activities and Cash flow from Investment activities
(c) Cash Flow from Operating Activities and Cash flow from Financial activities
(d) All of the options 

Question 24: Refund of income tax is the part of
(a) Operating activities in Cash Flow Statement
(b) Financing Activities in Cash Flow Statement
(c) Investing Activities in Cash Flow Statement
(d) All of the options

Question 25: Which is the Method for the preparation of cash flow statement
(a) Direct Method
(b) Both Direct and Indirect
(c) Indirect Method
(d) Average Method 

Question 26: A cash flow statement is also prepared to determine the
(a) Liquidity position of the organisation
(b) Debt position of the organisation
(c) Net Profit position of the organisation
(d) Net Profit position of the organisation 

Question 27: The most important objective of cash flow statement is that helps to ascertain the and outflows of cash and from
(a) All of the options
(b) Gross inflows
(c) Outflows of cash
(d) Cash equivalents 

Question 28: Rent received is classified under
(a) Investing Activities
(b) Operating Activities
(c) Cash and Cash Equivalents
(d) Financing Activities 

Question 29: How many methods for the preparation of cash flow statement
(a) 3
(b) 4
(c) 2
(d) 5 

Question 30: Cash flows from investing activities are those
(a) All of the options
(b) Property
(c) Plant
(d) Intangible assets.

Question 31: Under Cash Flow from Operating Activities incorporates are
(a) All of the options
(b) Cash received from customers
(c) Paid to suppliers
(d) Paid for operating costs 

Question 32: What are the objectives of preparing cash flow statement
(a) All of the options
(b) To determine the liquidity position of the organisation
(c) To know about the requirement of cash in future
(d) To ascertain the gross inflows and outflows of cash

Question 33: When Company repurchases shares, pays dividends or pays off debt, it records a
(a) Cash inflow
(b) Not related to cash
(c) Cash outflow
(d) All of the options 

Question 34: Cash flows from financing activities are those that take place between
(a) Firm and its investors
(b) Sundry Creditors and Sundry Debtors
(c) Net profit & loss
(d) All of the options

Question 35: The cash flow statement begins with the

(a) Cash Flow from Financing Activities
(b) Cash Flow from Operating Activities
(c) Cash Flow from Investing Activities
(d) None of these

Question 36: If the net profits made during the year are Rs. 50,000 and the bills receivables have decreased by Rs. 10,000 during the year then the cash flow from operating activities will be equal to Rs.

(a) Rs. 40,000
(b) Rs. 70,000
(c) Rs. 50000
(d) Rs. 60,000

Question 37: An increase in accrued income during the particular year is ____________for calculating the cash flow from operating activities (added to/deducted from).
(a) Added to
(b) Deducted from
(c) Divided to
(d) All of the options

Question 38: Expenses paid in advance at the end of the year are______________the profit made during the year
(a) Deducted from
(b) Added to
(c) Divided to
(d) All of the options

Question 39: Opening Stock Rs. 7000, Closing stock Rs. 10000, Cash Purchase Rs. 82000. Sales Rs. 125000 including credit sales Rs. 18000, Cash generated from operations Equal
(a) Rs. 22000
(b) Rs. 42000
(c) Rs. 28000
(d) Rs. 30000 

Question 40: Total Sales Rs, 500000, Credit Sales Rs. 225000, Total Purchase Rs. 248000, Credit Purchase Rs. 108000, Cash Operating Exp Rs. 40000, Cash From Operation will be
(a) Rs. 95000
(b) Rs. 90000
(c) Rs. 60000
(d) RS. 70000 

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Question 41: The primary objective of cash flow statement is to provide useful information about

(a) Net Profit
(b) Cash Flow
(c) Net Loss 
(d) All of the options

Question 42: For calculating cash flow from operating activities, provision for doubtful debts is __________the profit made during the year
(a) Deducted from
(b Divided to
(c) Added to
(d) All of the options 

Question 43: A cash flow statement shows
(a) Both Inflow and Outflow
(b) Inflow cash
(c) Outflow cash
(d) Not related to cash

Question 44: Expenses paid in advance at the end of the year are______________the profit made during the year
(a) Deducted from
(b) Added to
(c) Divided to
(d) All of the options

Question 45: Cash flows from financing activities are those that take place between
(a) Firm and its investors
(b) Sundry Creditors and Sundry Debtors
(c) Net profit & loss
(d) All of the options

Question 46: An increase in accrued income during the particular year is ____________for calculating the cash flow from operating activities (added to/deducted from).
(a) Added to
(b) Deducted from
(c) Divided to
(d) All of the options

Question 48: Total Sales Rs, 500000, Credit Sales Rs. 225000, Total Purchase Rs. 248000, Credit Purchase Rs. 108000, Cash Operating Exp Rs. 40000, Cash From Operation will be
(a) Rs. 95000
(b) Rs. 90000
(c) Rs. 60000
(d) RS. 70000 

Question 49: If the net profits made during the year are Rs. 50,000 and the bills receivables have decreased by Rs. 10,000 during the year then the cash flow from operating activities will be equal to Rs.
(a) Rs. 40,000
(b) Rs. 70,000
(c) Rs. 60,000
(d) Rs. 50000

Question 50: Opening Stock Rs. 7000, Closing stock Rs. 10000, Cash Purchase Rs. 82000. Sales Rs. 125000 including credit sales Rs. 18000, Cash generated from operations Equal

(a) Rs. 42000
(b) Rs. 28000
(c) Rs. 30000
(d) Rs. 22000 

Question 51: Acquisition and disposal of long term assets is included in
(a) Cash flow from investing activities
(b) Cash flow from financing activities
(c) Cash flow from operating activities
(d) All of the options

Question 52: Is payment for purchase of fixed assets will be classified as operating activity for both finance and non finance company
(a) No its investing activities
(b) No Its financing activities
(c) Not to be recorded
(d) All of the options

Question 53: When the company issues new shares, it records a
(a) Cash inflow
(b) Cash outflow
(c) Not related to cash
(d) All of the options 

Question 54. A Ltd., engaged in the business of retailing of two wheelers, invested Rs. 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

Question 55: Which of the following are cash flow from operating activities
(a) Cash Receipts from customers and Cash Paid to Supplier and Employees
(b) Cash Receipts from customers
(c) Cash Paid to Supplier and Employees
(d) None of the options

Question 56: The various activities operating, investing and financing classified as per ___related to cash flow statement
(a) AS 3 (revised)
(b) AS 4 (revised)
(c) AS 5 (revised)
(d) AS 6 (revised)

Question 57. 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

Question 58: Which is the cash equivalents
(a) All of the options
(b) Convertible into cash within three months.
(c) Highly liquid and capable of paying debts.
(d) Easily convertible into cash and risk-free.

Question 59: Cash Inflows from Investing Activities are
(a) All of the options
(b) Cash receipt from disposal of fixed assets
(c) Interest received in cash from loans and advances
(d) Dividend received from investments in other enterprises

Question 60: Which of the following are cash flow from investing activities
(a) All of the options
(b) Interest received
(c) Dividend received
(d) Sale of fixed assets

Question 61. Dividend received by financial enterprise is shown in Cash Flow Statement under
(a) Operating Activities.
(b) Investing Activities.
(c) Financing Activities.
(d) General Activities.

Question 62. Mention the net amount of‘Source’ or ‘Use’ of cash when a fixed asset having book value of Rs. 15,000 is sold at a loss of Rs. 5,000.
(a) Use Rs.5,000
(b) Source Rs. 10,000
(c) Use 115,000
(d) Source 115,000

Question 63. Dividend paid by a non-financial company is shown as
(a) Operating Activity.
(b) Investing Activity.
(c) Financing Activity.
(d) Cash and Cash Equivalent.

Question 64. From the following information find the cash generated from operations:
Operating Profit before working capital changes 1,00,000
Depreciation on fixed assets 15,000
Loss on sale of Furniture 5,000
Interest paid 13,000
Dividend received
Increase in debtors 8,000
Decrease in stock 7,000
Increase in creditors 4,000
(a) Rs 1,18,000
(b) Rs 1,24,000
(c) Rs 1,03,000
(d) Rs 1,00,000

Question 65. From the following information, the outflow of cash for the purchase of machinery will be:
Written down value of machinery as on 1.4.2011 – Rs 5,00,000
Written down value of machinery as on 31.3.2012 -Rs7,00,000
Depreciation on machinery charged during the year Rs 60,000
Machinery having book value Rs 25,000 sold for Rs 20,000
(a) Rs 2,70,000
(b) Rs 2,80,000
(c) Rs 2,75,000
(d) Rs 2,85,000

Question 66.Bank Overdraft and cash credit are to be treated as:
(a) Cash Equivalents
(b) Non Current Liabilities
(c) Investing Activity
(d) Short Term Borrowings

Question 67. Which of the following transactions would not create a cash flow ?
(a) A company purchased some of its own stock from a stockholder
(b) Amortization of a patent
(c) Payment of a Cash Dividend
(d) Sale of equipment at book value

Question 68. From the following particulars, what will be the amount of provision for tax made during the year?
Provision for Taxation
31.3.2011 50,000
31.3.2012 40,000
The Company paid taxes Rs 45,000 for the year 2011-2012.
(a) Rs 45,000
(b) Rs 35,000
(c) Rs 40,000
(d) Rs 50,000

Question 69. Which of the following transactions would result inflow of cash:
(a) Cash withdrawn from Bank for office use.
(b) Purchase of machinery worth Rs 2,00,000 and issued shares in consideration thereof.
(c) Sale of furniture for Rs 3,000 to Mr. Mohan.
(d) Cash received from Debtors Rs 6,000

Question 70. Gain on sale of tangible non current asset is an
(a) Operating activity
(b) Investing activity
(c) Financing activity
(d) Cash and Cash Equivalents

Question 71. From the following information find out the cash flow from financing activities.
Liabilities
Proposed Dividend
31st March 2013 20,000
31st March 2014 15,000
Additional Information: Equity Share Capital raised 3,00,000 10% Debentures Redeemed 1,00,000 Preference Share capital Redeemed 50,000. Interim Dividend paid during the year 20,000
(a) Rs 1,25,000
(b) Rs 1,00,000
(c) Rs1,50,000
(d) Rs 1,30,000

Question 72.From the following information find out the inflow of cash
Office Equipment `
31st March, 2014 60,000
31st March, 2013 1,00,000
` Additional Information:
Depreciation for the year 2013-14 is Rs 7,000, Purchase of office Equipment during the year Rs 10,000 Part of Office Equipment sold at a profit of Rs 6,000
(a) Rs 48,000
(b) Rs 49,000
(c) Rs 44,000
(d) Rs 33,000

Question 73.From the following information find out the inflow of cash
31st March, 2015 31st March, 2014
Plant and Machinery Account ` Rs6,00,000 Rs 4,50,000
Accumulated Depreciation ` Rs1,60,000 Rs 1,00,000
Additional Information: Depreciation for the year 2014‐15 is Rs 80,000. During the year Machinery was Purchased for Rs 2,50,000 and a part of asset was sold at a profit of Rs 40,000.
(a) Rs 1,20,000;
(b) Rs 1,00,000;
(c) Rs 80,000;
(d) Rs40000

Question 74. Gain on sale of tangible current asset is an
(a) Operating activity
(b) Investing activity
(c) Financing activity
(d) Cash and Cash Equivalents

Question 75. A decrease in outstanding expense would result in
(a) Decrease in cash balance
(b) Increase in cash balance
(c) Unaltered
(d) Would change the current liabilities.

Question 76.Which of the following transactions would result in neither cash inflow nor outflow of cash and cash equivalents.
(a) Issue of share capital
(b) Issue of bonus shares
(c) redemption of debentures
(d)Trade recievable realize(d)

Question 77. Which of the following shall be considered as an outflow of cash in cash flow statement.
(a) Decrease in Public Deposits
(b) Issue of share capital
(c) Increase in accounts payable
(d) Decrease in accounts receivables.

Question 78. Pick the odd one out
(a) Long term borrowings
(b) Reserves and surplus
(c) Share capital
(d) Public deposits.

Question 79. Expenses paid in advance at the end of the year are i…….in ……ii activities while preparing cash flow statement
(a) Added,Operating
(b) Subtracted,Operating
(c) Added,Investing
(d) Subtracted,Investing

State True of False

Question 1.Gratuity paid to a retiring employee is an Operating activity.   

Question 2.Buy Back of shares is an extraordinary item for Financing activity. 

Question 3.Issue of Bonus shares is shown as a financing activity.

Question 4.Operating activities are principal revenue producing activities of an enterprise and those activities that are not investing or financing activities.   

Question.Purchase of securities by a non- finance company is.   

Question 5.Shares issued to promoters in consideration of their services are shown as a financing activity.   

 

Fill in the Blanks

Question 1.Patents purchased and completely amortized in the year of purchase is added under_____ ________and shown as an outflow under______.

Question 2. Loss on issue of debentures written off is shown by way of deduction from_________________ of the debentures. 

Question 3.Debentures issued for consideration other than cash are not shown in the Cash Flow Statement because ______________is not received against the issue. 

Question 4.The basis of Cash Flow Statement is . 

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